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X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.?
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X and Y are partners sharing profits in the ratio of 7:3. A surrenders...
Journal Entries for Admission of a New Partner and Withdrawal of Goodwill
Introduction:
In this scenario, X and Y are partners sharing profits in the ratio of 7:3. They admit a new partner Z and surrender a part of their shares. Z brings in his share of goodwill in cash, and the existing goodwill is already in the books at a certain value. The partners withdraw 30% of the credited goodwill.
Journal Entries:
The following journal entries will be passed to record the admission of the new partner and withdrawal of goodwill:
1. Surrender of Shares by X and Y:
X surrenders 1/7th of his share, while Y surrenders 1/3rd of his share in favor of Z.
X's share = 7/10
Y's share = 3/10
Step 1: Calculate the surrendered shares of X and Y
Surrendered share of X = 1/7 × 7/10 = 1/10
Surrendered share of Y = 1/3 × 3/10 = 1/10
Step 2: Adjust the shares of X and Y
Adjusted share of X = 7/10 - 1/10 = 6/10
Adjusted share of Y = 3/10 - 1/10 = 2/10
Step 3: Pass the journal entry for surrender of shares
Z's Capital A/c Dr. (To X's Capital A/c and Y's Capital A/c) (Adjustment of Sacrifice Ratio)
2. Admission of Z and Payment of Goodwill:
Z brings in his share of goodwill in cash worth Rs. 35,000. The existing goodwill is already in the books at Rs. 10,000.
Step 1: Calculate the total value of goodwill
Total value of goodwill = Existing goodwill + Z's share of goodwill
Total value of goodwill = Rs. 10,000 + Rs. 35,000 = Rs. 45,000
Step 2: Calculate the new profit sharing ratio
New profit sharing ratio = Adjusted share of X : Adjusted share of Y : Z's share of profit
New profit sharing ratio = 6:2:2
Step 3: Calculate the value of Z's share of profit
Value of Z's share of profit = Total profit × Z's share of profit ratio
Value of Z's share of profit = (6/10 + 2/10 + 2/10) × Profit = 10/10 × Profit
Step 4: Calculate the amount to be paid to Z for goodwill
Amount to be paid to Z = Z's share of profit × Total value of goodwill
Amount to be paid to Z = 10/10 × Rs. 45,000 = Rs. 45,000
Step 5: Pass the journal entry for admission of Z and payment of goodwill
Z's Capital A/c Dr. Rs. 45,000
To X's Capital A/c Rs. 27,000
To Y's Capital A/c Rs. 9,000
To Goodwill A/c Rs. 9,000 (Adjustment of New Profit Sharing Ratio)
3. Withdrawal of Goodwill:
The partners withdraw 30% of the credited goodwill.
Step 1: Calculate the withdrawn amount of goodwill for each partner
Withdrawn amount
Introduction:
In this scenario, X and Y are partners sharing profits in the ratio of 7:3. They admit a new partner Z and surrender a part of their shares. Z brings in his share of goodwill in cash, and the existing goodwill is already in the books at a certain value. The partners withdraw 30% of the credited goodwill.
Journal Entries:
The following journal entries will be passed to record the admission of the new partner and withdrawal of goodwill:
1. Surrender of Shares by X and Y:
X surrenders 1/7th of his share, while Y surrenders 1/3rd of his share in favor of Z.
X's share = 7/10
Y's share = 3/10
Step 1: Calculate the surrendered shares of X and Y
Surrendered share of X = 1/7 × 7/10 = 1/10
Surrendered share of Y = 1/3 × 3/10 = 1/10
Step 2: Adjust the shares of X and Y
Adjusted share of X = 7/10 - 1/10 = 6/10
Adjusted share of Y = 3/10 - 1/10 = 2/10
Step 3: Pass the journal entry for surrender of shares
Z's Capital A/c Dr. (To X's Capital A/c and Y's Capital A/c) (Adjustment of Sacrifice Ratio)
2. Admission of Z and Payment of Goodwill:
Z brings in his share of goodwill in cash worth Rs. 35,000. The existing goodwill is already in the books at Rs. 10,000.
Step 1: Calculate the total value of goodwill
Total value of goodwill = Existing goodwill + Z's share of goodwill
Total value of goodwill = Rs. 10,000 + Rs. 35,000 = Rs. 45,000
Step 2: Calculate the new profit sharing ratio
New profit sharing ratio = Adjusted share of X : Adjusted share of Y : Z's share of profit
New profit sharing ratio = 6:2:2
Step 3: Calculate the value of Z's share of profit
Value of Z's share of profit = Total profit × Z's share of profit ratio
Value of Z's share of profit = (6/10 + 2/10 + 2/10) × Profit = 10/10 × Profit
Step 4: Calculate the amount to be paid to Z for goodwill
Amount to be paid to Z = Z's share of profit × Total value of goodwill
Amount to be paid to Z = 10/10 × Rs. 45,000 = Rs. 45,000
Step 5: Pass the journal entry for admission of Z and payment of goodwill
Z's Capital A/c Dr. Rs. 45,000
To X's Capital A/c Rs. 27,000
To Y's Capital A/c Rs. 9,000
To Goodwill A/c Rs. 9,000 (Adjustment of New Profit Sharing Ratio)
3. Withdrawal of Goodwill:
The partners withdraw 30% of the credited goodwill.
Step 1: Calculate the withdrawn amount of goodwill for each partner
Withdrawn amount
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X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.?
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X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.?.
X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.?.
Solutions for X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? in English & in Hindi are available as part of our courses for Commerce.
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Here you can find the meaning of X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? defined & explained in the simplest way possible. Besides giving the explanation of
X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.?, a detailed solution for X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? has been provided alongside types of X and Y are partners sharing profits in the ratio of 7:3. A surrenders 1/7th form his share and Y surrenders 1/3rd share in favour of Z, a new partner. Z brings in his share of firm’s goodwill of Rs.35,000 in cash. Goodwill already appears in firm’s book at Rs.10,000. Pass necessary journal entries assuming that amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them.? theory, EduRev gives you an
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