1.

Give Journal entries to record the following arrangements in the books of the firm: (a) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium (goodwill) of ₹ 2,000 for 1/4th share of the profits, shares shares of B and C remain as before. (b) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of ₹ 2,100 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.

Answer»

1. CASH a/c.... Dr. 2000To Premium for Goodwill a/c 2000(Being premium for goodwill brought in by D)2. Premium for Goodwill a/c..... Dr. 2000To B's Capital a/c 1200To C's Capital a/c 800(Being premium brought in by D distributed among the partners in the ratio of 3:2)WORKING note:Distribution of goodwill:B's share= 3/5 * 2000 = 1200C's share= 2/5 * 2000= 800(b) JOURNAL1. Cash a/c........ Dr. 2100To Premium for Goodwill a/c 2100(Being premium for goodwill brought in by D)2. Premium for Goodwill a/c..... Dr. 2100To B's Capital a/c 1400To C's Capital a/c 700(Being premium brought in by D distributed among the partners in the ratio of 2:1)Working note:1. Sacrificing ratio:B's SACRIFICE= 1/6C's sacrifice= 1/12Ratio= 2:12. Distribution of goodwill:B's share= 2/3 * 2100 = 1400C's share= 1/3 * 2100 = 700



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