DK Goel Accountancy Class 12 Solutions Chapter 3 Admission of a Partner are created by expert Accountancy teachers from the latest version of DK Goel Class 12 Accountancy books. We at CoolGyan’S provide DK Goel Solutions to assist students in developing a comprehensive understanding of all the theories. There are numerous concepts in Accountancy. However, the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is essential.

DK Goel Solutions Class 12 – Chapter 3 – Part A

**Question 1**

A and B are partners sharing profits in the ratio of 3:2. They admit C into the company for 1/4th share in profit which he takes 1/6th from A and 1/12th from B. However, C brings ₹50,000 as goodwill out of his share of ₹90,000. No goodwill account appears in the books of the company. Pass necessary journal entries to record this arrangement.

**Solution: **

Journal | |||||

Date | Particulars | L.F | Dr. (₹) | Cr. (₹) | |

Bank Account | Dr. | 50,000 | |||

To Premium for Goodwill A/c (A part of his share of goodwill/premium brought in by C) | 50,000 | ||||

Premium for Goodwill A/c C’s Current A/c | Dr. Dr. | 50,000 40,000 | |||

To A’s Capital A/c | 60,000 | ||||

To B’s Capital A/c (Goodwill/premium credited to A and B in their sacrificing ratio, i.e, 2:1) | 30,000 |

**Question 2**

A and B are partners sharing profits equally. They admit C into partnership, C paying only ₹60,000 for premium out of his share of a premium of ₹1,80,000 for a 1/4th share of profit. Goodwill account appears in the book at ₹3,00,000. Give the necessary journal entries.

**Solution: **

Journal Entry | |||||

Date | Particulars | L.F | Dr. (₹) | Cr. (₹) | |

A’s Capital A/c | Dr. | 1,50,000 | |||

B’s Capital A/c | Dr. | 1,50,000 | |||

To Goodwill A/c (The existing goodwill is written off) | 3,00,000 | ||||

Bank A/c | Dr. | 60,000 | |||

To Premium for Goodwill A/c (A part of his share of goodwill/premium brought in by C) | 60,000 | ||||

The premium for Goodwill A/c | Dr. | 60,000 | |||

C’s Current A/c | Dr. | 48,000 | |||

To A’s Capital A/c | 54,000 | ||||

To B’s Capital A/c (The goodwill/premium credited to old partners in their sacrificing ratio i.e 1:1) | 54,000 |

**Question 3**

X and Y are partners in a company. Their profit sharing ratio is 5:3. They admit Z into a partnership for 1/4th share. As between themselves, A and B decide to share profits equally in the future. C brings in ₹1,20,000 as his capital and ₹60,000 as premium. Calculate the sacrificing ratio and record the necessary journal entries on the assumption that the amount of premium brought in by C is retained in the business.

**Solution: **

Journal | |||||

Date | Particulars | L.F | Dr. (₹) | Cr. (₹) | |

Bank A/c | Dr. | 1,80,000 | |||

To Z’s Capital A/c | 1,20,000 | ||||

To Premium for Goodwill A/c (The amount of goodwill/premium brought in cash) | 60,000 | ||||

The premium for Goodwill A/c | Dr. | 60,000 | |||

To X’s Capital A/c (Full amount of goodwill /premium transferred to X’s Capital A/c, as he alone has sacrificed | 60,000 |

Calculation of new profit sharing ratio: C takes a 1/4th share out of 1.

Thus, the remaining profit is 3/4; This is divided equally between A and B

X’s new share = 3/4 x 1/2 = 3/8

Y’s new share = 3/4 x 1/2 = 3/8

Sacrificed made by X = 5/8 – 3/8 =2/8

Sacrificed made by Y = 3/8 – 3/8 =0

Hence, X alone has sacrificed and as such he alone will be entitled to the full amount of goodwill premium brought in by Z.

**Question 4**

Balance Sheet of P and Q who share profits and losses in the ratio of 5:3 as at 31st March, 2018 was a follows.

Liabilities | ₹ | Assets | ₹ |

Capital Accounts: | Land & Building | 3,00,000 | |

P Q Profit & Loss A/c Workmen Compensation Reserve Sundry Creditors | 2,50,000 1,50,000 1,30,000 60,000 50,000 | Machinery Stock Debtors Cash Advertisement Expenditure (Deferred Revenue) | 2,00,000 70,000 30,000 10,000 30,000 |

6,40,000 | 6,40,000 |

They admit R as a partner for 1/3 rd share in the profits of the firm which he acquires from P and Q in the ratio of 3:1. R brings in ₹4,00,000 as his capital. Ascertain the amount of goodwill and pass journal entries on the admission of R.

**Solution: **

Journal | |||||

Date | Particulars | L.F | Dr. (₹) | Cr. (₹) | |

2018 1st April | Profit and Loss A/c Workmen Compensation Reserve A/c | Dr. Dr. | 1,30,000 60,000 | ||

To P’s Capital A/c To Q’s Capital A/c (Transfer of accumulated profits to old partners in their old profit sharing ratio) | 1,18,750 71,250 | ||||

P’s Capital A/c Q’s Capital A/c | Dr. Dr. | 18,750 11,250 | |||

To Advertisement Expenditure A/c (Transfer of accumulated loss to old partners in their old profit sharing ratio) | 30,000 | ||||

Bank A/c | Dr. | 4,00,000 | |||

To R’s Capital A/c (Amount brought in by R as his capital) | 4,00,000 | ||||

R’s Current A/c | Dr. | 80,000 | |||

To P’s Capital A/c To Q’s Capital A/c (R’s share of goodwill credited to P and Q in their sacrificing ratio 3:1) | 60,000 20,000 |

**Working Note:**

Calculation of hidden goodwill

Total of Capital of the new firm on the basis of R’s capital: ₹4,00,000 x 3/1 | 12,00,000 | |

Less: Net worth of new firm: | ||

Adjusted capital of P | ||

(₹2,50,000 + ₹1,18,750 – ₹18,750) | 3,50,000 | |

Adjusted capital of Q | ||

(₹1,50,000 + ₹71,250 – ₹11,250) | 2,10,000 | |

Capital of R | 4,00,000 | 9,60,000 |

Value of the firm’s goodwill | 2,40,000 | |

R’s share of goodwill = ₹2,40,000 x 1/3 = ₹ 80,000 |

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DK Goel Accountancy Solutions Class 12 – Part A (Chapter wise) | ||

Chapter 1 Accounting for Partnership Firms – Fundamentals | Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners | |

Chapter 4 Retirement or Death of a Partner | Chapter 5 Dissolution of a Partnership Firm |