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M.38 An Aid to Accountancy—CBSE XII

10. AN EXTRACT OF BALANCE SHEET
as at 31st March, 2018
Liabilities ` Assets `

Building Fund Building-in-Progress 6,00,000
Opening Balance 8,00,000 10% Building Fund Investments 8,00,000
Add: Donation Received 10,00,000 Outstanding Subscription for Governor’s Party 10,000
Interest on Building Fund
Investments 80,000
18,80,000
Less: Transfer to Capital Fund 6,00,000 12,80,000
Subscription for Governor’s Party 50,000
(` 40,000 + ` 10,000)
Capital Fund
Opening Balance 18,00,000
Add: Transfer from Building Fund 6,00,000 24,00,000

11. (a) Average Profit
-
+
+
` (4,00,000 + 4,80,000 7,33,000 33,000 2,20,000)
`
= = 3,60,000
5
Goodwill of the Firm = Average Profit × No. of Years’ Purchase
= ` 3,60,000 × 2 = ` 7,20,000.
(b) JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
Kanwar’s Capital A/c ...Dr. 1,20,000
To Kumar’s Capital A/c 60,000
To Kavita’s Capital A/c 60,000
(Being the adjustment of goodwill among partners on change in
profit-sharing ratio)
(c)

Working Note:
Calculation of Sacrifice/(Gain) of Partners Due to Change in Profit-sharing Ratio:

Share Kumar Kanwar Kavita

Old Share 1/3 1/3 1/3
New Share 1/4 2/4 1/4
1 1 43- 1 2 46- 43-
Difference (Old Share – New Share) - = - = 1 - 1 =
3 4 12 3 4 12 3 4 12
1 2 1
= (Sacrifice) = - (Gain) = (Sacrifice)
12 12 12
Kanwar has gained, so he will be debited by 2/12 of ` 7,20,000 = ` 1,20,000.

Kumar and Kavita have sacrificed, so they will be credited by 1/12 of ` 7,20,000 = ` 60,000 (each).