A and B were partners in a firm sharing profits in ratio of 3:1. Goodwill appeared in books at 4,40,000. R was admitted to the firm. the new profit sharing ratio amoung A,B and R was 2:2:1. R brought 1,00,000 as capital and necessary amount of cash for his goodwill. the goodwill of the firm was valued at 2,50,000. the new firm earned 50,000 as profit after R's admission. Pass necessary entries
Answers
(i) Anu's Capital a/c... Dr. 330000
Bhagwan's Capital a/c.... Dr. 110000
To Goodwill a/c 440000
(Being goodwill written off)
(ii) Bank a/c.... Dr. 150000
To Raja's Capital a/c 100000
To Premium for Goodwill a/c 50000
(Being cash and premium for goodwill brought in by Raja)
(iii) Premium for goodwill a/c.... Dr. 50000
Bhagwan's Capital a/c.... Dr. 37500
To Anu's Capital a/c 87500
(Being premium for goodwill and Bhagwan's gain transferred to Anu)
Working Note:
Calculation of sacrificing ratio:
Anu's sacrifice= 3/4- 2/5= 7/20
Bhagwan's gain= 1/4- 2/5= -3/20
Total goodwill of the firm= 250000
Bhagwan's share= 3/20* 250000
= 37500
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