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A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries?
Most Upvoted Answer
A and B are partners profits n losses as 2:1 .C and D are admitted and...
Journal Entries for Admission of C and D and Valuation of Goodwill:
Valuation of Goodwill:
1. To A's Capital Account - Dr. (1/3 of Goodwill) - (1/3 x 2,00,000) = 66,666.67
To B's Capital Account - Dr. (1/3 of Goodwill) - (1/3 x 2,00,000) = 66,666.67
To Goodwill Account - Dr. (1/3 of Goodwill) - (1/3 x 2,00,000) = 66,666.67
Admission of C:
2. To Cash Account - Dr. 50,000
To C's Capital Account - Cr. 50,000
3. To Stock Account - Dr. 40,000
To C's Capital Account - Cr. 40,000
4. To Goodwill Account - Dr. 66,666.67
To C's Capital Account - Cr. (1/4 x 66,666.67) = 16,666.67
To D's Capital Account - Cr. (3/4 x 66,666.67) = 50,000
Admission of D:
5. To Goodwill Account - Dr. 66,666.67
To D's Capital Account - Cr. 66,666.67
6. To D's Capital Account - Dr. 50,000
To Cash Account - Cr. 50,000
Explanation:
Valuation of Goodwill:
The existing partners, A and B, have a profit sharing ratio of 2:1. When C and D are admitted, the new profit sharing ratio becomes 4:2:3:1. This means that the total profit is divided among the four partners in the ratio of 4:2:3:1. Therefore, the goodwill of the firm needs to be revalued.
To revalue the goodwill, we need to find out the existing value of the goodwill. The existing partners, A and B, share the profits in the ratio of 2:1. Therefore, the value of the goodwill is divided equally among them in the ratio of 1:1. The total value of the goodwill is 2,00,000. Therefore, each partner's share of the goodwill is 66,666.67.
Admission of C:
C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of goodwill in cash. Therefore, we need to make the following journal entries:
1. To Cash Account - Dr. 50,000
To C's Capital Account - Cr. 50,000
This entry records the cash brought in by C as his capital.
2. To Stock Account - Dr. 40,000
To C's Capital Account - Cr. 40,000
This entry records the stock brought in by C as his capital.
3. To Goodwill Account - Dr. 66,666.67
To C's Capital Account - Cr. (1/4 x 66,666.67) = 16,666.67
To D's Capital Account - Cr. (3/4 x 66,666.67) =
Valuation of Goodwill:
1. To A's Capital Account - Dr. (1/3 of Goodwill) - (1/3 x 2,00,000) = 66,666.67
To B's Capital Account - Dr. (1/3 of Goodwill) - (1/3 x 2,00,000) = 66,666.67
To Goodwill Account - Dr. (1/3 of Goodwill) - (1/3 x 2,00,000) = 66,666.67
Admission of C:
2. To Cash Account - Dr. 50,000
To C's Capital Account - Cr. 50,000
3. To Stock Account - Dr. 40,000
To C's Capital Account - Cr. 40,000
4. To Goodwill Account - Dr. 66,666.67
To C's Capital Account - Cr. (1/4 x 66,666.67) = 16,666.67
To D's Capital Account - Cr. (3/4 x 66,666.67) = 50,000
Admission of D:
5. To Goodwill Account - Dr. 66,666.67
To D's Capital Account - Cr. 66,666.67
6. To D's Capital Account - Dr. 50,000
To Cash Account - Cr. 50,000
Explanation:
Valuation of Goodwill:
The existing partners, A and B, have a profit sharing ratio of 2:1. When C and D are admitted, the new profit sharing ratio becomes 4:2:3:1. This means that the total profit is divided among the four partners in the ratio of 4:2:3:1. Therefore, the goodwill of the firm needs to be revalued.
To revalue the goodwill, we need to find out the existing value of the goodwill. The existing partners, A and B, share the profits in the ratio of 2:1. Therefore, the value of the goodwill is divided equally among them in the ratio of 1:1. The total value of the goodwill is 2,00,000. Therefore, each partner's share of the goodwill is 66,666.67.
Admission of C:
C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of goodwill in cash. Therefore, we need to make the following journal entries:
1. To Cash Account - Dr. 50,000
To C's Capital Account - Cr. 50,000
This entry records the cash brought in by C as his capital.
2. To Stock Account - Dr. 40,000
To C's Capital Account - Cr. 40,000
This entry records the stock brought in by C as his capital.
3. To Goodwill Account - Dr. 66,666.67
To C's Capital Account - Cr. (1/4 x 66,666.67) = 16,666.67
To D's Capital Account - Cr. (3/4 x 66,666.67) =
Community Answer
A and B are partners profits n losses as 2:1 .C and D are admitted and...
Bank a/c Dr 70,000
To D's Capital 50,000
To Premium for Gw. 20,000
Bank a/c Dr. 1,10,000
Stock a/c Dr. 40,000
To C's Cap. 90,000
To Premium for Gw. 60,000
Premium for Gw. a/c Dr. 31,999
To A's Capital 21,333
To B's Capital 10,666
To D's Capital 50,000
To Premium for Gw. 20,000
Bank a/c Dr. 1,10,000
Stock a/c Dr. 40,000
To C's Cap. 90,000
To Premium for Gw. 60,000
Premium for Gw. a/c Dr. 31,999
To A's Capital 21,333
To B's Capital 10,666
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A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries?
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A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries?.
A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries?.
Solutions for A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? in English & in Hindi are available as part of our courses for Commerce.
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A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries?, a detailed solution for A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? has been provided alongside types of A and B are partners profits n losses as 2:1 .C and D are admitted and profit sharing ratio becomes 4:2:3:1. Goodwill is valued at 2,00,000. D brings rewuired goodwill and 50,000 cash for capital . C brings in 50,000 cash and 40,000 worth stock as his capital in addition to the required amount of gOodwill in cash . show the necessary journal entries? theory, EduRev gives you an
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