Question : A and B are partners sharing profits and losses in the ratio of 4:1. They admit C into partnership for $\frac{1}{6}$th share for which he pays Rs.20,000 for goodwill. A, B and C decide to share future profits in the ratio of 3: 2: 1 respectively.
Choose the correct journal entry.
Option 1: Premium for goodwill a/c ........Dr 20,000 To A's capital A/c 15,000 To B"s capital A/c 5,000
Option 2: Premium for goodwill a/c....... Dr 20,000 To A's capital A/c 20,000
Option 3: Premium for goodwill a/c .......Dr 20,000 To B"s capital A/c 20,000
Option 4: Premium for Goodwill A/c.......Dr 20,000 B's Capital A/c.......Dr 16,000 To A's Capital A/c 36,000
Correct Answer: Premium for Goodwill A/c.......Dr 20,000 B's Capital A/c.......Dr 16,000 To A's Capital A/c 36,000
Solution : Answer = Premium for Goodwill A/c.......Dr 20,000 B's Capital A/c.......Dr 16,000 To A's Capital A/c 36,000
Working Note: Old Ratio of $A$ and $B=4: 1$ New Ratio of A, B and C = $3: 2: 1$ Sacrifice or Gain: A=$ \frac{4}{5}-\frac{3}{6}=\frac{24-15}{30}=\frac{9}{30}$ (Sacrifice) B=$ \frac{1}{5}-\frac{2}{6}=\frac{6-10}{30}=\frac{4}{30}$ (Gain) C= $\frac{1}{6}$ or $\frac{5}{30}$ (Gain) Only A sacrifices his share to the benefit of B and C. Consequently, not only the goodwill brought in by C will be credited to A, B must also give $\frac{4}{30}$ th share of goodwill to A. The total value of Firm's.goodwill based on C's share is $20,000 \times \frac{6}{1}$ or Rs. 1,20,000. Hence, the amount of goodwill to be contributed by B will be (Rs. $1,20,000 \times \frac{4}{30}$ ) or Rs. 16,000. This will be adjusted by debiting $\beta$ 's Capital and Crediting A's Capital. Hence, the correct option is 4.
Question : Apurva, Dimple, Komal and Saloni are partners in a firm sharing profits and losses in the ratio of 2: 2: 1: 1. Dimple and Komal decided to retire from the firm. The goodwill of the firm was valued at Rs.9,00,000. Apurva and Saloni decided to share future profits and losses in the ratio of 3: 2 Choose the correct Journal entry.
Option 1: Apurva's Capital A/c........Dr 2,40,000 Saloni's Capital A/c..........Dr 2,10,000 To Dimple's Capital A/c 3,00,000 To Komal Capital A/c 1,50,000
Option 2: Saloni's Capital A/c.........Dr 2,10,000 To Dimple's Capital A/c 60,000 To Komal Capital A/c 1,50,000
Option 3: Apurva's Capital A/c..........Dr 4,50,000 To Dimple's Capital A/c 3,00,000 To Komal Capital A/c 1,50,000
Option 4: None of the above.
Question : Maanika, Bhari and Komal are partners sharing profits in the ratio of 6:4:1. Komal is guaranteed a minimum profit of Rs 2,00,000. The firm incurred a loss of Rs 2,20,000 for the year ended March 31st, 2018. Choose an appropriate journal entry to be passed for deficiency.
Option 1: Maanika's capital a/c Dr 1,50,000 Bhari's capital a/c Dr 50,000 To Komal's capital a/c 2,00,000
Option 2: Maanika's capital a/c Dr 2,00,000 To Komal's capital a/c 2,00,000.
Option 3: Komal's capital a/c Dr 4,00,000 To Maanika's capital a/c 2,40,000 To Bhari's capital a/c 1,60,000
Option 4: Maanika's capital a/c Dr 2,40,000 Bhari's capital a/c Dr 1,60,000 To Komal's capital a/c 4,00,000.
Question : A, B and C are partners sharing profit and losses in the ratio 2: 3: 4. On 31st December 2022. A retired and B and C decided to share future profit in the ratio of 2: 1. The following balances appeared in the books on this date Profit and loss (CR) 72,000 General reserve Rs 27,000 The correct journal entry for the above will be .........
Option 1: General reserve A/c.........Dr 27,000 Profit and loss A/c............Dr 72,000 To A's capital a/c 33,000 To B's capital a/c 33,000 To C's capital A/c 33,000
Option 2: General reserve A/c........Dr 27,000 Profit and loss A/c...........Dr 72,000 To A's capital a/c 22,000 To B's capital a/c 33,000 To C's capital A/c 44,000
Option 3: General reserve A/c........Dr 27,000 Profit and loss A/c..........Dr 72,000 To B's capital a/c 33,000 To C's capital A/c 66000
Option 4: None of the above
Question : How is goodwill recorded when a partner retires?
Option 1: Remaining Partner’s Capital A/cs Dr. (In Gaining Ratio)
To Retiring Partner’s Capital A/c (with his share of goodwill)
Option 2: Remaining Partner’s Capital A/cs Dr. (In New Ratio)
Option 3: Goodwill A/c Dr.
To Retiring Partner’s Capital A/c (with his share)
Option 4: Goodwill A/c Dr.
To All Partner’s Capital A/cs (In Old Ratio)
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