Page 70 - MA-12

Admission of a Partner 3.29

GUIDE TO ANSWERS

1. On Ist Occassion (1st April, 2016):
Amount to be paid by C—` 20,984 to A and ` 16,787 to B. New Profit-sharing Ratio—4 : 4 : 3.
On 2nd Occassion (1st April, 2018):
Amount to be paid by C—` 5,877 to A and B each; New Profit-sharing Ratio—1 : 1 : 1.
Valuation of Goodwill:
` 61 560 + ` 64 520 + ` 81 660
,
,
,
Average Profit = = ` 69 247,
3
Goodwill at 2 Years’ Purchase of Average Profit = ` 69,247 × 2 = ` 1,38,494.
3
C’s Share in Goodwill = ` 1,38,494 × = ` 37,771.
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2. (i) Dr. Bank A/c and Cr. Premium for Goodwill A/c by ` 10,000.
(ii) Dr. Premium for Goodwill A/c—` 10,000; Cr. A’s Capital A/c—` 6,667 and B’s Capital A/c—` 3,333.
(iii) Dr. C’s Current A/c—` 6,000; Cr. A’s Capital A/c—` 4,000 and B’s Capital A/c—` 2,000.
3. (i) Dr. Rao’s Current A/c—` 7,500; Cr. Murty’s Capital A/c—` 4,500 and Shah’s Capital A/c—` 3,000.
(ii) (a) Dr. Murty’s Capital A/c—` 6,000 and Shah’s Capital A/c—` 4,000; Cr. Goodwill A/c—` 10,000.
(b) Dr. Rao’s Current A/c—` 7,500; Cr. Murty’s Capital A/c—` 4,500 and Shah’s Capital A/c—` 3,000.
4. Gain (Profit) on Revaluation—` 30,000; Capital Balances: A—` 1,65,000; B—` 1,40,000; C—` 1,15,000;
D—` 1,20,000; Total of Balance Sheet—` 5,67,200.
[Hint: Change in profit-sharing ratio will result in loss of 6/24th to A and 2/24th to B; gain of 2/24th to
C and 1/4th to D. Hence, the entry for adjustment of goodwill premium will be:
` `
C ’s Capital A/c ...Dr. 10,000
Premium for Goodwill A/c ...Dr. 30,000
To A’s Capital A/c 30,000
To B ’s Capital A/c 10,000.]

5. Gain (Profit) on Revaluation—` 6,300; Capital Accounts of Jain—` 85,600; Gupta—` 71,700 and Mishra—
` 52,433; Total of Balance Sheet—` 2,49,733.
[Hint: Calculation of Mishra’s Capital: Combined Capital of Jain and Gupta (after adjustments) for 3/4th
share = ` 85,600 + ` 71,700 = ` 1,57,300
New Firm’s Total Capital = ` 1,57,300 × 4/3
Mishra’s Capital for 1/4th share = ` 1,57,300 × 4/3 × 1/4 = ` 52,433.]
6. Gain (Profit) on Revaluation—` 9,600; Capital A/cs: A—` 61,750; B—` 31,650; C—` 23,350; Total of Balance
Sheet—` 1,46,050.
[Hint: Capitals of A and B after all adjustments are ` 61,750 and ` 31,650 respectively. Hence, the combined
capital of A and B is equal to ` 93,400 which is 4/5(1 – 1/5) of the capital of the firm.
Hence, C’s 1/5th share in the capital will be: ` 93,400 × 5/4 × 1/5 = ` 23,350.]