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Admission of a Partner Test - 53

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Admission of a Partner Test - 53
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  • Question 1
    1 / -0
    N & Z are partners in a firm sharing profits and losses in the ratio of 3:2. S joins the firm for 1/3rd share, and is to pay Rs 5,000 as premium for goodwill but cannot pay anything. As between N and Z, they decided to share profits and losses equally. It was agreed that goodwill has to be adjusted through partner's capital account. Required journal entry -
  • Question 2
    1 / -0
    In which of the following case the need for the valuation of goodwill in a firm may arise?
    (I) Admission of new partner
    (II) While changing profit sharing ratio
    (III) Retirement of partner
    (IV) death of partner
    Select the correct answer from the options given below 
  • Question 3
    1 / -0
    N, S & Z are partners. They withdraw a fixed sum of Rs. $$2,000$$ per month as follows:
    N draws at the beginning of each month, S withdraws at the middle of each month and Z withdraws at the end of each month. Rate of interest on drawings is $$8\%$$ p.a. Interest on drawings for the $$3$$ partners respectively will be.
    Solution
    Calculation of interest on drawings:
    $$A=2,000\times 12\times 8\%\times \dfrac{6.5}{12}=1,040$$
    $$B=2,000\times 12\times 8\%\times \dfrac{6}{12}=960$$
    $$C=2,000\times 12\times 8\%\times \dfrac{5.5}{12}=880$$.
  • Question 4
    1 / -0
    A,B & C are equal partners. C wanted to retire for which value of goodwill is considered as 90,000 The necessary journal entry to be passed at the time of retirement will be:
    Solution
    Profit sharing ratio of A,B and C is 1 : 1 : 1, Herein, after called as old ratio. After retirement of A, profit sharing ratio of B and C is 1 : 1, Herein, after called as new ratio. 
    calculation of gaining and sacrificing ratio of partners:

    Partner

    Old share

    New share

    Gain

    Sacrifice

    A

    1/3

    1/2

    1/6

    -

    B

    1/3

    1/2

    1/6

     -

    C

    1/3

     -

    -

     1/3


     Therefore, A's share of goodwill is :

    Rs. 90000 * (1/3) = Rs. 30000

    Adjusting entry would be :

    A's capital A/c         Dr.                        15000

    B's capital A/c         Dr.                        15000

                           To C's capital A/c                          30000

    (The amount of share of goodwill adjusted on A's retirement)

  • Question 5
    1 / -0
    A, B & C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs 40,000 capital and Rs 10,000 being half of the premium for goodwill. The value of goodwill of the firm is ________. 
    Solution
    D bought Rs 10000 as half of the premium for goodwill.
    Full amount of his share of goodwill 10000*2 =Rs 20000
    Value of goodwill of the firm = 20000 * 4/1
                                                    = Rs 80000
  • Question 6
    1 / -0
    X & Y share profits & losses in the ratio of 2:1. They take Z as a partner and the new profit sharing ratio becomes 3:2:1. Z brings Rs 4,500 as premium for goodwill. the full value of goodwill will be -
  • Question 7
    1 / -0
    Ramesh and Suresh are partners sharing profits and losses in the ratio of 2:1 respectively. Ramesh capital is Rs 1,02,000 and Suresh capital is Rs 73,000. They admit Mahesh and agree to give him 1/5th share in future profits. Mahesh bring Rs 14,000 as share of goodwill. He agrees to contribute capital in the new profit sharing ratio. How much capital should be brought by Mahesh?
  • Question 8
    1 / -0
    A , B & C are equal partners. They decided to take D who brought in Rs 36,000 as goodwill. The new profit sharing ratio is 3:3:2:2. The journal entry for goodwill will be -
    Solution

  • Question 9
    1 / -0
    A & B are partners having capital of Rs 29,000 & 15,000. Reserve shown in balance sheet was Rs 10,000. C is admitted as a new partner introducing a capital of Rs 21,000. New profit sharing ratio is 5:3:2. Profit on revaluation of assets & liabilities were Rs 5,000. C is to bring premium for goodwill in cash. Goodwill amount being calculated on the basis of C's share in the profits and capital contributed by him. Premium for goodwill to be brought in new partner C should be  ............
  • Question 10
    1 / -0
    A,B & C sharing profit & losses in the ratio of $$3:2:1$$. A retired and Goodwill of the firm is to be valued at $$Rs.24,000$$. What will be the treatment for goodwill?
    Solution
    Accounting treatment of goodwill in case of retirement of a partner:
    In case of retirement of a partner, the continuing partners will gain in terms of profit sharing ratio. Therefore, they have to pay to retiring partner for his share of goodwill in the firm in the gaining ratio. For this purpose, the goodwill is valued on the date of retirement and adjusted through the capital accounts of partners.
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