Question - 21 : - A, B and C were partners in a firm sharing profits in 3:3:2 ratio. They admitted D as a new partner for 4/7 profit. D acquired his share 2/7 from A. 1/7 from B and 1/7 from C. Calculate new profit sharing ratio?

Answer - 21 : -

New Ratio = Old Ratio − Sacrificing Ratio

Question - 22 : - Radha and Rukmani are partners in a firm sharing profits in 3:2 ratio. They admitted Gopi as a new partner. Radha surrendered 1/3 of her share in favour of Gopi and Rukmani surrendered 1/4 of her share in favour of Gopi. Calculate new profit sharing ratio?

Answer - 22 : -

Question - 23 : - Singh, Gupta and Khan are partners in a firm sharing profits in 3:2:3 ratio. They admitted Jain as a new partner. Singh surrendered 1/3 of his share in favour of Jain: Gupta surrendered 1/4 of his share in favour of Jain and Khan surrendered 1/5 in favour of Jain. Calculate new profit sharing ratio?

Answer - 23 : -

Question - 24 : - Sandeep and Navdeep are partners in a firm sharing profits in 5:3 ratio. They admit C into the firm and the new profit sharing ratio was agreed at 4:2:1. Calculate the sacrificing ratio?

Answer - 24 : -

Sacrificing Ratio = Old Ratio − New Ratio

Question - 25 : - Rao and Swami are partners in a firm sharing profits and losses in 3:2 ratio. They admit Ravi as a new partner for 1/8 share in the profits. The new profit sharing ratio between Rao and Swami is 4:3. Calculate new profit sharing ratio and sacrificing ratio?

Answer - 25 : -

New Ratio = Combined Share of Rao and Swami × Proportion of Rao and Swami in the combined share

4:3:1

Sacrificing Ratio = Old Ratio − New Ratio

Question - 26 : - Capital employed in a business is ₹. 2, 00,000. The normal rate of return on capital employed is 15%. During the year 2015 the firm earned a profit of ₹. 48,000. Calculate goodwill on the basis of 3 years purchase of super profit?

Answer - 26 : -

Question - 27 : - The books of Ram and Bharat showed that the capital employed on 31.12.2016 was ₹. 5,00,000 and the profits for the last 5 years : 2015 ₹. 40,000; 2014 ₹. 50,000; 2013 ₹. 55,000; 2012 ₹. 70,000 and 2011 ₹. 85,000. Calculate the value of goodwill on the basis of 3 years purchase of the average super profits of the last 5 years assuming that the normal rate of return is 10%?

Answer - 27 : -

Year	Profit
2015	40,000
2014	50,000
2013	55,000
2012	70,000
2011	85,000
Sum of 5 years profit	3,00,000

Average Super Profit = Average Actual Profit – Normal Profit

= 60,000 – 50,000

= ₹ 10,000

Goodwill = Average Super Profit × Number of year purchase

= 10,000 × 3

= ₹ 30,000

Question - 28 : - Rajan and Rajani are partners in a firm. Their capitals were Rajan ₹. 3, 00,000; Rajani ₹. 2, 00,000. During the year 2015 the firm earned a profit of ₹. 1, 50,000. Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%?

Answer - 28 : -

Rajan’s Capital	3,00,000
Rajni’s Capital	2,00,000
Total Capital Employed	5,00,000

Normal Rate of Return = 20%

Alternative Method

Normal Profit = Capital Employed ×

= ₹ 2, 50,000

Question - 29 : - A business has earned average profits of ₹. 1, 00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are ₹. 10, 00,000 and its external liabilities are ₹. 1, 80,000. The normal rate of return is 10%?

Answer - 29 : -

Capital Employed = Assets − External Liabilities

= 10, 00,000 − 1, 80,000

= Rs 8, 20,000

Normal Profit = Capital Employed ×

= Rs 82,000

Super Profit = Actual Profit − Normal Profit

= 1, 00,000 − 82,000

= Rs 18,000

Goodwill = Super Profit ×

= Rs 1, 80,000

Alternative Method

Question - 30 : -
Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3. They admitted Ghosh as a new partner for 1/5 share of profits. Ghosh is to bring in ₹. 20,000 as capital and ₹. 4,000 as his share of goodwill premium. Give the necessary journal entries:
a) When the amount of goodwill is retained in the business.
b) When the amount of goodwill is fully withdrawn.
c) When 50% of the amount of goodwill is withdrawn.
d) When goodwill is paid privately.

Answer - 30 : -

Journal Entries
S.No.		Particulars			L.F.	Debit Amount ₹	Credit Amount ₹
Case (a)
	Cash A/c			Dr.		24,000
		To Ghosh’s Capital A/c					20,000
		To Premium for Goodwill A/c					4,000
	(Capital and Goodwill his share brought by Ghosh)

	Premium for Godwill A/c			Dr.		4,000
		To Verma’s Capital A/c					2,500
		To Sharma’s Capital A/c					1,500
	(Goodwill brought by Ghosh credited to Old Partners in Sacrificing ratio)

Case (b)	Cash A/c			Dr.		24,000
		To Ghosh Capital A/c					20,000
		To Premium for Goodwill A/c					4,000
	(Capital and Goodwill brought by Ghosh for (1/5) share of profit)

	Premium for Goodwill A/c			Dr.		4,000
		To Verma’s Capital A/c					2,500
		To Sharma’s Capital A/c					1,500
	(Goodwill brought by Ghosh credited in Old Partner in Sacrificing Ratio)

	Verma’s Capital A/c		Dr.			2,500
	Sharma’s Capital A/c		Dr.			1,500
		To Cash A/c					4,000
	(Amount of Premium for Goodwill withdrawn by Old Partners)

Case (c)	Cash A/c			Dr.		24,000
		To Ghosh’s Capital A/c					20,000
		To Premium for Goodwill A/c					4,000
	(Capital and Goodwill brought by Ghosh for (1/5) share of profit)

	Premium for Goodwill A/c			Dr.		4,000
		To Verma’s Capital A/c					2,500
		To Sharma’s Capital A/c					1,500
	(Premium for Goodwill credited to Old Partner’s Captial Account in sacrificing ratio)

	Verma’s Capital A/c			Dr.		1,250
	Sharma’s Capital A/c					750
		To Cash A/c					2,000
	(Half of the amount of premium for goodwill withdrawn by Old partners)

Case (d)	No entry: Goodwill was not brought in to firm

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