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At the time of retirement of a partner, compensation paid to sacrificing partner as Goodwill is recorded by passing the following Journal entry:

Ans – b) Explanation:- The retiring partner sacrifices his share to the remaining partners. The remaining partners gain his share in the gaining ratio. As goodwill is part of future expected profits. The retiring partners’ share in the goodwill is…

Anurag Pathak
July 2, 2023

At the time of retirement of a partner, Goodwill existing in the Balance Sheet is written off by passing the following Journal entry:

Ans – c) Explanation:- The old goodwill is the purchased goodwill. It is purchased in the past by all the partners including retiring partners. Thus Existing Goodwill is written off in the old profit-sharing ratio among all the partners including…

Anurag Pathak
July 2, 2023

Which of the following statement is correct?

Ans – d) Explanation:- As goodwill is part of the expected future profits that would be earned on the basis of the partner’s efforts till date. Thus retiring partners’ share in the goodwill is credited to him. This share is…

Anurag Pathak
July 2, 2023

Sonu, Monu and Gopal are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. The extract of their Balance Sheet is as follows:

Ans – d) Explanation:- If no information is given all accumulated profits and reserve are distributed in old partners in their old profit sharing ratio. Thus no workmen compensation reserve will be shown in new Balance Sheet.

Anurag Pathak
July 2, 2023

Accumulated losses are:

Ans – c) Explanation:- Accumulated losses belong to the old partners in their old profit-sharing ratio. as it is part of the past profits.

Anurag Pathak
July 2, 2023

Accumulated Profits are

Ans – c) Explanation:- Accumulated profits belongs to all the partners as it is earned in their old profit sharing ratio.

Anurag Pathak
July 2, 2023

Gaining Ratio is calculated as:

Ans – a) Explanation:- In the case of Retirement, Gaining Ratio is calculated as Gaining Ratio = New Profit sharing ratio – Old Profit sharing ratio

Anurag Pathak
July 2, 2023

Retiring Partner is compensated for foregoing his profit share in favour of all or some of the partners remaining as partners. The compensation is paid by the remaining partners in

Solution:- Ans – b) Explanation:- The remaining partners acquired the retiring partner’s share in the gaining ratio.

Anurag Pathak
July 2, 2023

Atal and Jawahar are partners with capital of ₹ 1,30,000 and ₹ 90,000 respectively. They admit Mohan as a partner with 1/5th share in the profits fo the firm. Mohan brings in ₹ 80,000 as capital and also his share of goodwill. Goodwill is to be calculated on the basis of Mohan’s share in the profits and capital contributed by him. Pass necessary Journal entries.

Solution:-

Anurag Pathak
July 1, 2023

Anuj and Vinod are partners in a firm. They admit Samar as a partner for 1/4th share in the profits of the firm. Samar brings ₹ 5,00,000 as his capital. The value of the total assets of the firm is ₹ 13,50,000 and outside liabilities are valued at ₹ 2,50,000 on that date. Calculate Samar’s share of goodwill.