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Admission of a Partner Test - 67

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Admission of a Partner Test - 67
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  • Question 1
    1 / -0
    P & Q are partners sharing Profits in the ratio of $$2:1$$. R is admitted to the partnership with effect from $$1$$st April on the term that he will bring Rs. $$20,000$$ as his capital for $$1/4$$th share and pays Rs. $$9,000$$ for goodwill, half of which is to be withdrawn by P & Q. How much cash can P & Q withdraw from the firm?
  • Question 2
    1 / -0
    A & B are partners having capital of Rs.$$29,000$$ & Rs.$$15,000$$. Reserve shown in balance sheet was Rs.$$10,000$$. C is admitted as a new partner introducing a capital of Rs.$$21,000$$. New parofit 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 3
    1 / -0
    Capital accounts of partner A & B are Rs.$$30,000$$ & Rs.$$16,000$$. They admitted C on the following conditions.
     -That C brings in Rs.$$10,000$$ as his capital for $$1/4$$th share in profits.
     -That a goodwill account be raised in the books of the firm at Rs.$$15,000$$
     -Profit on revaluation of assets & liabilities was Rs.$$2,100$$.
     -That the capital accounts of the partners be readjusted on the basis of their profit sharing ratio and any additional amount be debited or credited to their current accounts.
     -General reserve appearing in balance sheet at the time of admission of C was Rs.$$6,000$$.
    To give effect to above, current account of A & B  will be ________________.
    Solution

  • Question 4
    1 / -0
    H & M are partners in a firm sharing profits and losses in the ratio of $$3:2$$. Their capitals are $$Rs.90,000$$ and $$Rs.60,000$$ respectively. They admit K as a new partner who will get $$1/6$$th share in the profits of the firm. K brings in $$Rs.37,500$$ as his capital. Calculate hidden goodwill.
    Solution
    When the value of goodwill is not specifically given, the valuje of goodwill has to be inferred as follows:

     Particulars                                                       Rs.
    Incoming partner's capital * reciprocal of share of incoming partner (W.N.1)
    Less : Total capital after taking into consideration the capital brought in by the incoming partner (W.N.2)
    		 225000

    (187500)
     Value of goodwill 37500
    Working note:
    1.  Incoming partner's capital * reciprocal of share of incoming partner 
       = Rs. 37500 (1/6) 
       = Rs. 225000
    2. Total capital after taking into consideration the capital brought in by the incoming partner
    = H's capital + M's capital + K's capital
    = Rs. (90000 + 60000 + 37500) 
    = Rs.187500
  • Question 5
    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-

    A Capital A/c      Dr.
    B Capital A/c      Dr.
    C Capital A/c      Dr.
       To D Capital A/c    		$$6,000$$
    $$6,000$$
    $$24,000$$




    $$36,000$$
    Cash A/c      Dr.
       To A Capital A/c
       To B Capital A/c
       To C Capital A/c    		$$36,000$$




    $$6,000$$
    $$6,000$$
    $$24,000$$
    Cash A/c      Dr.
       To A Capital A/c
       To B Capital A/c
       To C Capital A/c    		$$36,000$$




    $$24,000$$
    $$6,000$$
    $$6,000$$
    Goodwill A/c     Dr.
       To A Capital A/c
       To B Capital A/c
       To C Capital A/c    		$$36,000$$




    $$12,000$$
    $$12,000$$
    $$12,000$$
  • Question 6
    1 / -0
    N & Z are partners in a firm sharing profits and losss in the ratio of $$3:2$$. S joins the firm for $$1/3$$rd 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-

    N Capital A/c      Dr.
    Z Capital A/c      Dr.
       To S A/c    		$$4,000$$
    $$1,000$$



    $$5,000$$
    S Capital A/c      Dr.
       To N Capital A/c
       To Z Capital A/c    		$$5,000$$



    $$4,000$$
    $$1,000$$
    S Capital A/c      Dr.
       To N Capital A/c
       To Z Capital A/c    		$$5,000$$



    $$1,000$$
    $$4,000$$
    Premium for Goodwill A/c      Dr.
       To N Capital A/c
    To Z Capital A/c    		$$20,000$$



    $$8,000$$
    $$12,000$$
  • Question 7
    1 / -0
    The profits of last $$5$$ years are $$Rs.60,000$$; $$Rs.67,500$$; $$Rs.52,500$$; $$Rs.75,000$$ & $$Rs.60,000$$. Find the value of goodwill, if it is calculated on average profits of last $$5$$ years on the basis of $$3$$ years of purchase.
    Solution
    Calculation of goodwill: 
    1. Average profit = Total profit/ No. of years
       Average profit =  Rs. (60000 + 67500 + 52500 + 75000 + 60000)/ 5
       Average profit =  Rs. 315000/ 5
       Average profit =  Rs. 63000
    2. Goodwill = Average profit * No. of years purchase
        Goodwill = Rs. 63000 * 3
        Goodwill = Rs. 189000
  • Question 8
    1 / -0
    The profits of last five years are $$Rs.85,000$$, $$Rs.90,000$$; $$Rs.70,000$$; $$Rs.1,00,000$$ and $$Rs.80,000$$. Find the value of goodwill, if it is calculated on average profits of last five years on the basis of $$3$$ years of purchase.
    Solution
    Calculation of goodwill : 
    1. Average profit = Total profit/ No. of years
       Average profit =  Rs. (85000 + 90000 + 70000 + 100000 + 80000)/ 3
       Average profit =  Rs. 425000/ 5
       Average profit =  Rs. 85000
    2. Goodwill = Average profit * No. of years purchase
        Goodwill = Rs. 85000 * 3
        Goodwill = Rs. 255000
  • Question 9
    1 / -0
    A & B are sharing profits and losses in the ratio of $$3:2$$. C joins the firm for $$1/3$$rd share and is to pay Rs.$$20,000$$ as permium for goodwill but cannot pay anything. As between A & B, they decided to share profits and losses equally. Required journal entry

    A Capital A/c      Dr.
    B Capital A/c      Dr.
         To Coodwill A/c    		$$36,000$$
    $$24,000$$



    $$60,000$$
    Goodwill A/c      Dr.
       To A Capitla A/c
       To B Capital A/c     		$$60,000$$




    $$36,000$$
    $$24,000$$

    Goodwill A/c         Dr,
       To A Capital A/c
    To B Capital A/c    		$$60,000$$




    $$30,000$$
    $$30,000$$
    Premium for Goodwill A/c        Dr.
        To A Capital A/c
        To B Capital A/c    		$$60,000$$



    $$24,000$$
    $$36,000$$
  • Question 10
    1 / -0
    A & B are sharing profits & losses in the ratio of $$3:2$$. C is coming as a new partner who pays Rs.$$25,000$$ as premium fro goodwill. The profit sharing ration among A,B & C is equal. If premium money is retained in business which of the following journal entry is correct for sharing permium for goodwill?
    A Capital A/c                     Dr.
    B Capital A/c                     Dr.
       To Premium for Goodwill A/c    		$$20,000$$
    $$5,000$$



    $$25,000$$
    Premium for Goodwill A/c         Dr.
       To A Capital A/c
       To B Capital A/c    		$$25,000$$



    $$5,000$$
    $$20,000$$
    Premium for Goodwill A/c     Dr.
       To A Capital A/c
       To B Capital A/c    		$$25,000$$



    $$20,000$$
    $$5,000$$
    Premium for Goodwill A/c     Dr.
       To A Capital A/c
       To B Capital A/c    		$$25,000$$



    $$15,000$$
    $$10,000$$
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