Question : Surender, Ramesh, Naresh and Mohan are partners in a firm sharing profits in the ratio 2:1:2:1. On the retirement of Naresh, goodwill was valued at T 72,000. Surender, Ramesh  and Mohan decided to share future profits equally

Choose the correct  journal entry for the treatment of goodwill.

 

Option 1: Ramesh’s  Capital A/c ...Dr. 12,000

Mohan’s  Capital A/c ...Dr. 12,000

 To Naresh Capital A/c 24,000 

 

Option 2:  Ramesh’s  Capital A/c ...Dr. 24000

 To Naresh Capital A/c 24,000 

 

Option 3: Ramesh’s  Capital A/c ...Dr. 16000

Mohan’s  Capital A/c ...Dr. 8000

To Naresh Capital A/c 24000

 

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)

To Retiring Partner’s Capital A/c (with his share of goodwill)

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)

Question : A, B and C are equal partners. They decided to change the profit sharing ratio 4:3:2. For this purpose, the goodwill of the firm is valued at Rs 90,000.  The journal entry for the treatment of goodwill on change in profit sharing ratio will be

Option 1:  C’s capital A/c   Dr         10,000
        To A’s capital A/c  10,000

Option 2: B’s capital A/c  Dr     10,000
  To A’s capital A/c 10,000

Option 3: A’s capital A/c Dr       90,000

     To C's capital A/c  90,000

Option 4: A;s capital A/c Dr  10,000

      To C’s capital A/c   10,000

Question : What journal entry will be made of accumulated profits and losses on the death of partner? 

Option 1: Deceased Partner’s Capital A/c      Dr.

      To Profit and Loss A/c 

Option 2: Profit and Loss A/c             Dr.

To Deceased Partner’s Capital A/c 

Option 3: Deceased Partner’s Capital A/c      Dr.

  To Profit and Loss Suspense A/c 

Option 4: Profit and Loss Suspense A/c     Dr.

To Deceased Partner’s Capital A/c 

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

Question : What journal entry will be made to write off the goodwill that was already present in the balance sheet at the time of partner retired?

Option 1: Retiring Partner’s Capital A/c          Dr.

               To Goodwill A/c

Option 2:  All Partner’s Capital A/cs (including retiring)         Dr. (in old ratio) 

                   To Goodwill A/c

Option 3: Remaining Partner’s Capital A/cs              Dr. (in gaining ratio) 

                         To Goodwill A/c

Option 4: Remaining Partner’s Capital A/cs         Dr. (in new ratio)

                To Goodwill A/c