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M.422 An Aid to Accountancy—CBSE XII

Working Notes:
1. Calculation of P’s Share of Goodwill:
2
P’s Share of Goodwill = ` 90,000 × = ` 36,000.
5
Since, the new profit-sharing ratio of the remaining partners is not given, gain to the remaining part-
ners must be in old ratio.
Thus, Gaining Ratio of Q and R = 2 : 1.
2. Calculation of P’s Share of Profit:
(a) Total Profit = ` (2,00,000 + 1,80,000 + 2,10,000 – 1,70,000) = ` 4,20,000
(b) Average Profit = ` 4,20,000 ÷ 4 = ` 1,05,000
3 2
(c) P’s Share of Profit = ` 1,05,000 × ¥ = ` 10,500.
12 5
12. Calculation of Net Effect of Adjustment to be made: `
(i) Profit and Loss Account (Dr. Balance) (24,000)
(ii) General Reserve 1,44,000

(iii) Value of Goodwill 1,80,000
(iv) Decrease in amount of Creditors 2,400
(v) Decrease in value of Machinery (18,000)
(vi) Unrecorded Investments 1,35,600
(vii) Increase in value of Land 1,80,000
Net Effect 6,00,000
CALCULATION OF GAIN/(SACRIFICE) OF SHARE
Partners New Share Old Share Difference = New Share – Old Share
3 2 3 2 1
A - = (Gain)
6 6 6 6 6
2 3 2 3 –1
B - = (Sacrifice)
6 6 6 6 6
1 1
C ...
6 6
ADJUSTMENT ENTRY
Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 A’s Capital A/c (` 6,00,000 × 1/6) ...Dr. 1,00,000
To B’s Capital A/c (` 6,00,000 × 1/6) 1,00,000
(Being the adjustment made on account of change in profit-sharing
ratio by debiting gaining partner and crediting sacrificing partner)
Ê 1 3ˆ 1 3 3 1
13. (a) A’s Sacrifice Á Ë 6 th of his own share 5¯ ˜ = 6 ¥ 5 = 50 or 10

Ê 1 ˆ 1
B’s Sacrifice Á Ë 8 from his share ˜ = 8
¯