Question 14 Chapter 4 – Class 12 Part 1 Unimax

Question 14 Chapter 4 – Class 12 Part 1 Unimax

14. Aditi and Charvi are partner sharing Profits and Losses in the ratio of 3 : 1. The Capitals are Aditi Rs. 60000 and Charvi Rs. 20000. It has been decided that with effect from 1st January, 2021 Profit sharing ratio will be 5 : 3. The deed stated that goodwill is to be valued at 2 years purchase of average Profits of 3 years and Capitals of the two partners should be in their profit sharing ratio. The Profit for 20185, 2019 and 2020 were Rs. 22000, Rs. 25000 and Rs. 37000 respectively. Make necessary Journal entries. Show also the Capital Accounts of partners if Capitals of partners are to be adjusted in new Profit Sharing Ratio.

Table of Contents

The solution of Question 14 Chapter 4 – Class 12 Part 1 Unimax

Journal

Capital Accounts

Working Note :
Calculation of Sacrifice/Gain

2. Calculation of Goodwill
Total Profits = Rs. 22000 + Rs. 25000 + Rs. 37000
= Rs. 84000
Average Profits = Rs. 84000/3 = Rs. 28000
Goodwill = Rs. 28000 X 2 = Rs. 56000
Chavi will pay to Aditi 1/8th share of goodwill
Sacrificed by Aditi in favour of Chavi, on change in constitution
i.E 56000 X 1/8 = Rs. 7000
3. Calculation of New Capitals of Partners
Total capital of Aditi & Chavi = Rs. 60000 + Rs. 20000 = Rs. 80000
New Profit Sharing Ratio : 5 : 3
Aditi’s New Capital : Rs. 80000 X 5/8 = Rs. 50000
Chavi’s New Capital : Rs. 80000 X 3/8 = Rs. 30000

End of Solution

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Question 14 Chapter 4 – Class 12 Part 1 Unimax

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