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Read the following information and answer the given questions:
Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :
(i) Goodwill of the firm valued at ₹ 45,000.
(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.
(iii) Land and Building is overvalued by 10%.
(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.
Who will give the amount of goodwill to whom in what amount?
- a)Abha will give ₹4,500 to Vibha.
- b)Vibha will give ₹4,500 to Abha.
- c)Abha will give ₹3,000 to Vibha.
- d)Vibha will give ₹3,000 to Abha.
Correct answer is option 'D'. Can you explain this answer?
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Read the following information and answer the given questions:Abha an...
- Vibha will give ₹3,000 to Abha as a amount of goodwill.
- The goodwill amounts to the excess of the "purchase consideration" (the money paid to purchase the asset or business) over the net value of the assets minus liabilities. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched.
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Read the following information and answer the given questions:Abha an...
Calculation of amount of goodwill:
The goodwill of the firm is valued at ₹45,000. Since the partners do not want to record the goodwill, it will be adjusted in the new profit-sharing ratio. The old ratio was 2:1, and the new ratio is 3:2. The increase in the ratio is 3-2=1. So, the amount of goodwill to be adjusted is:
Goodwill = Increase in ratio / Total ratio x Value of goodwill
Goodwill = 1/5 x ₹45,000
Goodwill = ₹9,000
Adjustment of creditors:
The creditors of ₹8,000 are not likely to be claimed and should be written off. This will reduce the liabilities of the firm and increase the net assets. The adjustment entry will be:
Creditors account Dr. ₹8,000
To Profit and Loss Adjustment account ₹8,000
Adjustment of Land and Building:
The Land and Building is overvalued by 10%. This means that the value of the assets is higher than the actual value. To correct this, the asset value needs to be reduced by 10%. The adjustment entry will be:
Land and Building account Dr. ₹10,000
To Profit and Loss Adjustment account ₹10,000
Adjustment of Provision for Doubtful Debts:
The Provision for Doubtful Debts is to be reduced to ₹3,000. This means that the amount of provision is higher than required. To correct this, the provision needs to be reduced by ₹1,000. The adjustment entry will be:
Profit and Loss Adjustment account Dr. ₹1,000
To Provision for Doubtful Debts account ₹1,000
Distribution of profit:
After making the above adjustments, the new profit of the firm will be calculated. The profit will be distributed in the new profit-sharing ratio of 3:2.
Abha's share of profit = 3/5 x Total profit
Vibha's share of profit = 2/5 x Total profit
As per the new ratio, Vibha's share of profit has increased. So, Abha will give the amount of goodwill to Vibha to maintain the new ratio. The amount of goodwill is ₹9,000. The entry will be:
Vibha's Capital account Dr. ₹9,000
To Abha's Capital account ₹9,000
Therefore, the correct answer is option 'D' - Vibha will give ₹3,000 to Abha.
The goodwill of the firm is valued at ₹45,000. Since the partners do not want to record the goodwill, it will be adjusted in the new profit-sharing ratio. The old ratio was 2:1, and the new ratio is 3:2. The increase in the ratio is 3-2=1. So, the amount of goodwill to be adjusted is:
Goodwill = Increase in ratio / Total ratio x Value of goodwill
Goodwill = 1/5 x ₹45,000
Goodwill = ₹9,000
Adjustment of creditors:
The creditors of ₹8,000 are not likely to be claimed and should be written off. This will reduce the liabilities of the firm and increase the net assets. The adjustment entry will be:
Creditors account Dr. ₹8,000
To Profit and Loss Adjustment account ₹8,000
Adjustment of Land and Building:
The Land and Building is overvalued by 10%. This means that the value of the assets is higher than the actual value. To correct this, the asset value needs to be reduced by 10%. The adjustment entry will be:
Land and Building account Dr. ₹10,000
To Profit and Loss Adjustment account ₹10,000
Adjustment of Provision for Doubtful Debts:
The Provision for Doubtful Debts is to be reduced to ₹3,000. This means that the amount of provision is higher than required. To correct this, the provision needs to be reduced by ₹1,000. The adjustment entry will be:
Profit and Loss Adjustment account Dr. ₹1,000
To Provision for Doubtful Debts account ₹1,000
Distribution of profit:
After making the above adjustments, the new profit of the firm will be calculated. The profit will be distributed in the new profit-sharing ratio of 3:2.
Abha's share of profit = 3/5 x Total profit
Vibha's share of profit = 2/5 x Total profit
As per the new ratio, Vibha's share of profit has increased. So, Abha will give the amount of goodwill to Vibha to maintain the new ratio. The amount of goodwill is ₹9,000. The entry will be:
Vibha's Capital account Dr. ₹9,000
To Abha's Capital account ₹9,000
Therefore, the correct answer is option 'D' - Vibha will give ₹3,000 to Abha.
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Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer?
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Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer?.
Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer?.
Solutions for Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Here you can find the meaning of Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Read the following information and answer the given questions:Abha and Vibha are partners, who share profits and losses in the ratio of 2 : 1. From the 1st January 2021, the partners decided to change their profit - sharing ratio to 3 : 2 and agreed upon the following :(i) Goodwill of the firm valued at ₹ 45,000.(ii) Creditors of ₹ 8,000 are not likely to be claimed hence should be written off.(iii) Land and Building is overvalued by 10%.(iv) Provision for doubtful debts to be reduced to ₹ 3,000 The partners neither want to record the goodwill nor to distribute the general reserve.Who will give the amount of goodwill to whom in what amount?a)Abha will give ₹4,500 to Vibha.b)Vibha will give ₹4,500 to Abha.c)Abha will give ₹3,000 to Vibha.d)Vibha will give ₹3,000 to Abha.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice Commerce tests.
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