Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3:2 ratio. They admitted Ram Lal for 1/4 share on 1.1.2013. It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of last 4 years which were Rs. 50,000 for 2013, Rs. 60,000 for 2014, Rs. 90,000 for 2015 and Rs. 70,000 for 2016. Ram Lal did not bring his share of goodwill premium in cash. Record the necessary journal entries in the books of the firm on Ram Lal’s admission when: a) Goodwill already appears in the books at Rs. 2,02,500. b) Goodwill appears in the books at Rs. 2,500. c) Goodwill appears in the books at Rs. 2,05,000.
Answers
Answer:
Average Profit of 4 years = 270,000/4
= Rs. 67,500
Goodwill for 3 Yeara= 67,500 * 3
= Rs. 202,500
When Ramlal share Goodwill, Mohan lal will get:
=50,625 * 3/5 = Rs. 30,375
When Ramlal share Goodwill, Sohan lal will get:
=50,625 * 1/5 = Rs.20,250
Answer:
Acoounting transaction
Explanation:
Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3:2 ratio.
They admitted Ram Lal for 1/4 share on 1.1.2013.
It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of last 4 years which were Rs. 50,000 for 2013, Rs. 60,000 for 2014, Rs. 90,000 for 2015 and Rs. 70,000 for 2016.
Average Profit of 4 years = 270,000/4
= Rs. 67,500
Goodwill for 3 Yeara= 67,500 * 3
= Rs. 202,500
When Ramlal share Goodwill, Mohan lal will get:
=50,625 * 3/5 = Rs. 30,375
When Ramlal share Goodwill, Sohan lal will get:
=50,625 * 1/5 = Rs.20,250