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प्रश्न
Write the word/term or phrase which can substitute the following statement.
Account which is debited when new partner brings cash for his share of goodwill.
उत्तर
Cash/Bank A/c
Explanation: Cash/Bank A/c is debited when the new partner brings cash for his/her share of goodwill, following the rule "Debit what comes in". This amount of goodwill (premium) is transferred to the capital accounts of sacrificing partners in the sacrificing ratio of the old partners.
APPEARS IN
संबंधित प्रश्न
Why are heirs of a retiring/deceased partner entitled to a share of goodwill of the firm?
Kavi, Ravi, Kumar and Guru were partners in the firm sharing profits in the ratio of 3:2:2:1. On 1.2.2017, Guru retired and the new profit sharing ratio decided between Kavi, Ravi and Kumar were 3:1:1. On Guru’s retirement, the goodwill of the firm was valued at Rs 3, 60,000. Showing your working notes clearly, pass necessary journal entry in the books of the firm for the treatment of goodwill on Guru’s retirement
Ashish, Satish and Manish were partners in business profits and losses in the ratio of 3 : 1 : 1 respectively. Their Balance Sheet as on 31st March, 2016 was as follows :
Balance Sheet as on 31st March, 2016
| Liabilities | Amount | Assets | Amount |
| Capital accounts : | Plant and machinery | 70,000 | |
| Ashish | 80,000 | Stock | 50,000 |
| Satish | 60,000 | Debtors | 40,000 |
| Manish | 50,000 | Cash | 60,000 |
| Creditors | 10,000 | ||
| Reserve fund | 20,000 | ||
| 2,20,000 | 2,20,000 |
Manish died on 1st October, 2016 and the partnership deed provided that :
(1) The deceased partner to be given his share of profit upto the date of death on the basis of the profit of the previous year.
(2) His share of goodwill will be calculated on the basis of two years' purchase of average profit of the last four years
The net profits for the last four years were :
First year : Rs 1,40,000, Second year : Rs 1,10,000
Third year : Rs 90,000. Fourth year : Rs 60,000.
(3) Plant and machinery to be valued at Rs. 80,000. Reserve for doubtful debts of Rs. 4,000 to be created.
(4) The drawings of Manish upto the date of death amounted to `Rs 40,000.
(5) Interest on capital is to be allowed at 10% p.a. and interest on drawings is charged at 6% p.a.
Prepare :
(1) Profit and Loss Adjustment Account.
(2) Manish's Capital Account.
(3) Wording of Manish's share in profit and goodwill.
Answer in one sentence only.
How would you adjust retiring partner’s share of goodwill without opening goodwill account?
Write the term / word / phrase which can substitute the following statement :
The proportion in which the continuing partners benefit due to retirement of partner.
Select the most appropriate answer from the alternatives given below :
When goodwill is raised at its full value and it is written off __________ account is to be credited.
State whether the following statements is true or false :
Retiring partner is entitled to his share of goodwill.
Complete the following sentence.
"If goodwill already appears in the books, it will be written off by debiting all partner's capital account in their ______ ratio"?
On retirement/death of a partner, the retiring/deceased partner's capital account will be credited with ______
Gobind, Hari and Pratap are partners. On the retirement of Gobind, the goodwill already appears on the Balance Sheet at Rs. 24,000. The goodwill will be written off ______
Which Accounting standard states that Goodwill, in general, is recorded in the books only when some consideration in money or money's worth has been paid for it?
What journal entry will be recorded for writing off the goodwill already existing in Balance Sheet at the time of retirement of a partner?
Retiring partner's share of goodwill is debited to remaining partners in their ______.
Madhu, Manav and Mukul were partners in a firm sharing profits in the ratio of 3 : 2: 1. On 31st March, 2021 Mukul retired from the firm. On Mukul's retirement, goodwill of the firm was valued at ₹ 3,00,000. Pass necessary journal entry for the treatment of goodwill without opening Goodwill Account on Mukul's retirement.
Puneet, Purav and Parth were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. The firm closes its books on 31st March every year. As per the terms of partnership deed, on the death of any partner, the Goodwill of the firm will be calculated on the basis of 3 times the average profits of last 4 years. Puneet died on 1st July, 2021. The profits for last four years were:
| Year | Profit (₹) |
| 2017 - 18 | 90,000 |
| 2018 - 19 | 1,00,000 |
| 2019 - 20 | 1,30,000 |
| 2020 - 21 | 80,000 |
Puneet's share of profit up to the date of death was to be calculated on the basis of previous year's profit.
- Calculate goodwill of the firm and Puneet's share of goodwill.
- Calculate Puneet's share in the profits of the firm till the date of his death.
- Pass necessary journal entries for the treatment of goodwill without opening goodwill account and for Puneet's share of profit at the time of his death.
Vibha, Sudha and Ashish were partners in a firm sharing profits in the ratio 2:3:1. Sudha retired and the balance in her capital account after making necessary adjustments on account of reserves, revaluation of assets and re-assessment of liabilities was ₹ 85,000. Vibha and Ashish agreed to pay Sudha ₹ 1,15,000 in full settlement of her claim. Record the necessary journal entry for goodwill on Sudha's retirement.
Meena, Beena and Veena were partners in a firm sharing profits & losses equally. Their balance sheet as on 31st March, 2022 was as follow:
| Balance Sheet of Meena, Beena and Veena as on 31st March, 2022 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capitals: | Plant and Machinery | 2,40,000 | |||
| Meena | 1,50,000 | 3,25,000 | Stock | 60,000 | |
| Beena | 1,00,000 | Sundry Debtors | 35,000 | ||
| Veena | 75,000 | Cash at Bank | 50,000 | ||
| General Reserve | 30,000 | ||||
| Sundry Creditors | 30,000 | ||||
| 3,85,000 | 3,85,000 | ||||
Veena died on 30th June,2022. According to the partnership deed, the executors of the deceased partner were entitled to:
- Balance in Capital account
- Salary till the date of death @ ₹ 25,000 p.a.
- Share of Goodwill calculated on the basis of twice the average profits of past three years.
- Share of profit from the closure of last accounting year till the date of death on the basis of average of three completed years' profits before death.
- Profits for 2019-20, 2020-21 and 2021-22 were ₹ 1,20,000, ₹ 90,000 and ₹ 1,50,000 respectively.
Veena withdrew ₹ 15,000 on 1st June, 2022 for paying her daughter's school fees.
Prepare Veena's capital account to be rendered to her executors.
Kamal, Rahul and Neeraj were partners in a firm sharing profits and losses in the ratio of 5: 3: 2. On 31st March, 2002, their Balance Sheet was as under:
| Balance Sheet of Kamal, Rahul and Neeraj on 31st March, 2022 | ||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) |
| Capitals: | Land and Building | 1,70,000 | ||
| Kamal | 1,20,000 | 3,60,000 | Plant and Machinery | 2,60,000 |
| Rahul | 1,20,000 | Stock | 1,00,000 | |
| Neeraj | 1,20,000 | Debtors | 80,000 | |
| General Reserve | 1,20,000 | Cash | 50,000 | |
| Sundry Creditors | 1,80,000 | |||
| 6,60,000 | 6,60,000 | |||
On the above date, Rahul retired and following terms are agreed upon:
- Goodwill of the firm was valued at ₹ 3,50,000.
- An item of ₹ 10,000 included in sundry creditors is not likely to be claimed and hence written off. Stock was valued at ₹ 90,000.
- Capital of the new firm was fixed a ₹ 2,10,000 and the same will be adjusted in the profit sharing ratio of the remaining partners. For this purpose the required cash will be brought in or paid off as the case may be.
- Amount payable to Rahul will be transferred to his loan account.
Prepare Revaluation Account and Partners' Capital Accounts on Rahul's retirement.
