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5.38 Double Entry Book Keeping—CBSE XII

3. A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. D is admitted. The new profit-
sharing ratio among A, B, C and D will be 3 : 3 : 2 : 2. Calculate gain/sacrifice.
[Ans.: A sacrificed 6/30; B sacrificed 1/30 and C gained 1/30.]
4. X and Y shared profits in the ratio of 7 : 3. Z was admitted as a partner. X surrendered 1/7th of his share
and Y surrendered 1/3rd of his share in favour of Z. Calculate new ratio and sacrificing ratio. (Foreign 2005)
[Ans.: New Ratio of X, Y and Z—3 : 1 : 1; Sacrificing Ratio of X and Y—1 : 1.]
5. A and B are partners sharing profits in the ratio of 3 : 2. They admit C into partnership. C pays a premium
of ` 1,000 for 1/4th share of profits. The new ratio is 3 : 3 : 2. Goodwill Account appears in the books at
` 1,000. Give necessary Journal entries. (AI 2002 C, Foreign 2003)
[Ans.: (i) Dr. A’s Capital A/c by ` 600 and B’s Capital A/c by ` 400; Cr. Goodwill A/c by ` 1,000;
(ii) Dr. Cash A/c and Cr. Premium for Goodwill A/c by ` 1,000;
(iii) Dr. Premium for Goodwill A/c by ` 1,000; Cr. A’s Capital A/c by ` 900 and
B’s Capital A/c by ` 100; sacrificing ratio, i.e., 9 : 1.]
6. A and B are partners sharing profits equally. They admit C into partnership; C paying only
` 1,000 for premium out of his share of premium of ` 1,800 for 1/4th share of profit. Goodwill Account
appears in the books at ` 6,000. All the partners have decided that goodwill should not appear in the
new firm’s books. Give necessary Journal entries. (Delhi 1994, AI 2003)
[Ans.: Dr. Cash A/c and Cr. Premium for Goodwill A/c by ` 1,000; Dr. Premium for Goodwill A/c
by ` 1,000 and C’s Current A/c by ` 800; Cr. A’s Capital A/c by ` 900 and B’s Capital A/c by
` 900 in Sacrificing Ratio 1 : 1 and ` 6,000 existing goodwill is to be
written off between old partners in the old ratio.]
7. A and B are partners sharing profits and losses in the ratio of 2 : 1. They admit C, their Manager, into
partnership who is to get 1/3rd share in the business. C brings in ` 10,000 for his capital and ` 3,000
for 1/3rd share of goodwill. A, B and C agree to share future profits equally. The amount of goodwill is
withdrawn from the business. Pass necessary Journal entries in connection with C’s admission.
8. (a) Ashok and Ramu are partners sharing profits in the ratio of 7 : 3 respectively. Their capitals on
1st January, 2006 were ` 80,000 and ` 60,000 respectively. They admitted Vijay into the
partnership on that date giving him 1/5th share in future profits, which he acquired equally from
Ashok and Ramu. Vijay is to bring in ` 50,000 as his share of capital.
Find new profit-sharing ratio and value of the goodwill of the firm.
(b) Record necessary Journal entries on Vijay’s admission from the above mentioned transactions.
(Foreign 2006)
[Ans.: New Ratio—3 : 1 : 1; Value of Goodwill of the Firm—` 60,000; Dr. Bank A/c and
Cr. Vijay’s Capital A/c by ` 50,000; Dr. Vijay’s Capital/Current A/c by ` 12,000 and
Cr. Capital Accounts of Ashok and Ramu by ` 6,000 each.]
[Hint: Hidden Goodwill = (` 50,000 × 5/1) – (` 80,000 + ` 60,000 + ` 50,000) = ` 60,000.]
9. X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner for 1/4th share. His
share of goodwill is ` 18,000. Give Journal entries in the following cases:
(a) When the amount of goodwill is paid privately.
(b) When the goodwill is received in cash and retained in the business.
(c) When the goodwill is received in cash and withdrawn by the old partners.