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M.36 An Aid to Accountancy—CBSE XII

7. JOURNAL OF X LTD.

Date Particulars L.F. Dr. (`) Cr. (`)
Machinery A/c ...Dr. 1,78,000
To Y Ltd. 1,78,000
(Being the machinery purchased from Y Ltd.) (Note 1 and Note 2)
Y Ltd. ...Dr. 1,10,000
To Equity Share Capital A/c 1,00,000
To Securities Premium Reserve A/c 10,000
(Being 10,000 equity shares of ` 10 each issued at 10% premium)

Y Ltd. ...Dr. 18,000
Discount on Issue of Debentures A/c ...Dr. 2,000
To 9% Debentures A/c 20,000
(Being 200, 9% Debentures of ` 100 each issued at 10% discount)
Y Ltd. ...Dr. 50,000
To Bills Payable A/c 50,000
(Being the balance payment made by accepting one month bill of exchange)
Notes:
1. Cost of Machinery is the cost of acquisition, i.e., the amount of purchase consideration.
2. Purchase Consideration = ` 1,10,000 + ` 18,000 + ` 50,000 = ` 1,78,000.
8. JOURNAL ENTRY IN THE BOOKS OF THE FIRM
Date Particulars L.F. Dr. (`) Cr. (`)

2018
Feb. 1 Kavi’s Capital A/c ...Dr. 81,000
To Ravi’s Capital A/c (` 3,60,000 × 2/40) 18,000
To Kumar’s Capital A/c (` 3,60,000 × 2/40) 18,000
To Guru’s Capital A/c (WN 1) 45,000
(Being the adjustment for goodwill on Guru’s retirement)
Working Notes:
1
1. Guru’s Share in Goodwill = ` 3,60,000 × = ` 45,000.
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2. Calculation of Gaining Ratio:
Gain of a Partner = New Share – Old Share

Kavi Ravi Kumar Guru

3 1 1
New Share ...
5 5 5
3 2 1
Old Share
8 8 8
9 - 2 - 2 - 1 - 5
Gain/(Sacrifice) (Gain) (Sacrifice) (Sacrifice) or (Sacrifice)
40 40 40 8 40

As Kavi is the only gaining partner, he will compensate not only the retiring partner (Guru), but also the
sacrificing partners (Ravi and Kumar).