Admission of New Partner & Goodwill
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Admission of New Partner & Goodwill

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Questions and Answers

What is the total amount transferred to the Profit and Loss Appropriation Account from the Profit and Loss Account?

  • ₹ 40,000
  • ₹ 50,000
  • ₹ 30,000
  • ₹ 45,000 (correct)

    • How much interest was credited to John's Capital Account?

  • ₹ 1,200 (correct)
  • ₹ 2,000
  • ₹ 1,500
  • ₹ 1,800

    • Which partner received the highest amount as their share of profit?

  • John
  • Mohan (correct)
  • Sahil
  • Sukesh

    • What is the total effective contribution for Sahil?

    <p>₹ 6,00,000</p> Signup and view all the answers

    What is the interest charged on drawings for both partners combined?

    <p>₹ 720</p> Signup and view all the answers

    What is the total amount debited to the Interest on Capital Account?

    <p>₹ 3,000</p> Signup and view all the answers

    What ratio is used for the profit-sharing of Sahil, Sukesh, and Mohan?

    <p>3:3:4</p> Signup and view all the answers

    How much was charged as interest on drawings at the rate of 8%?

    <p>₹ 720</p> Signup and view all the answers

    What was the total amount transferred to the Capital Reserve from the gain on the re-issued shares?

    <p>₹900</p> Signup and view all the answers

    How much was recorded in the Share Forfeiture A/c for the forfeiture of 400 shares?

    <p>₹2,400</p> Signup and view all the answers

    What is the total amount received in the bank from the application money for shares issued?

    <p>₹12,80,000</p> Signup and view all the answers

    What was the total amount of Calls in Arrears during the bank entry for forfeiture?

    <p>₹2,100</p> Signup and view all the answers

    What was the value of securities premium reserve for 160,000 shares issued?

    <p>₹1,60,000</p> Signup and view all the answers

    What entry was made for the re-issue of 300 shares at ₹7 as fully paid?

    <p>Share Forfeiture A/c Dr. ₹900</p> Signup and view all the answers

    Which account was credited with the amount of 80,000 shares at ₹4 during the allotment?

    <p>Bank A/c</p> Signup and view all the answers

    How much was debited from the Equity Share Allotment A/c?

    <p>₹9,60,000</p> Signup and view all the answers

    What is the amount shown as 'To Balance c/d' for Leena in the final summary?

    <p>19,20,000</p> Signup and view all the answers

    What is the total amount for the 'By Revaluation A/c (Profit)' section for Naresh?

    <p>32,850</p> Signup and view all the answers

    How much was allocated to Madan's Capital A/c from the Advertisement Expenditure A/c?

    <p>1,60,000</p> Signup and view all the answers

    What amount was created for the Provision for Doubtful Debts A/c in the journal entry?

    <p>3,750</p> Signup and view all the answers

    What is the overall total of 'To Deferred' for all three individuals?

    <p>1,42,428</p> Signup and view all the answers

    How much was recorded as 'Bad Debts written off' in the journal entries?

    <p>5,000</p> Signup and view all the answers

    What was the balance shown for Naresh in the 'By Balance b/d' section?

    <p>10,50,000</p> Signup and view all the answers

    Which amount represents the split between Bad Debts and Provision for Doubtful Debts in the first April journal entry?

    <p>1,000</p> Signup and view all the answers

    What is Vidya's new share after Chintan took 1/10th share from Amit and Vidya?

    <p>8/20</p> Signup and view all the answers

    Which journal entry correctly reflects the writing off of bad debts valued at ₹ 15,000?

    <p>Bad Debts A/c...Dr. 15,000 To Sundry Debtors A/c 15,000 Revaluation A/c...Dr. 15,000 To Provision for Doubtful Debts A/c 15,000</p> Signup and view all the answers

    What is the new profit-sharing ratio of Manav and Narayan after Nath's retirement?

    <p>13:11</p> Signup and view all the answers

    If goodwill is valued at ₹ 60,000 and not previously recorded, what will be the necessary journal entry?

    <p>Chaman's Capital A/c Dr. 4,000 Anmol's Capital A/c Dr. 2,000 To Janak's Capital A/c 6,000</p> Signup and view all the answers

    What is the purpose of adjusting goodwill when a new partner is admitted?

    <p>To balance the equity among existing partners</p> Signup and view all the answers

    How is each partner's share of goodwill typically calculated upon a partner's retirement?

    <p>Based on the new profit-sharing ratio and the total goodwill value</p> Signup and view all the answers

    What amount is written off when debtors turn bad according to the given information?

    <p>₹ 15,000</p> Signup and view all the answers

    Which partner receives the capital adjustment related to goodwill after Nath retires?

    <p>Both Manav and Narayan</p> Signup and view all the answers

    What was the total cash used in investing activities?

    <p>₹ 3,90,000</p> Signup and view all the answers

    How much did the company receive from the issue of shares?

    <p>₹ 5,00,000</p> Signup and view all the answers

    What is the interest paid on debentures?

    <p>₹ 52,000</p> Signup and view all the answers

    What does the closing cash and cash equivalents amount to?

    <p>₹ 3,10,000</p> Signup and view all the answers

    What was the proposed dividend for previous years?

    <p>₹ 1,50,000</p> Signup and view all the answers

    What is the net profit before tax and extraordinary items?

    <p>₹ 2,50,000</p> Signup and view all the answers

    What was the cash flow from financing activities?

    <p>₹ 58,000</p> Signup and view all the answers

    What was the total cash inflow from the sale of non-current investments?

    <p>₹ 2,00,000</p> Signup and view all the answers

    Study Notes

    Profit Sharing Ratio Changes

    • Chintan takes 1/10th from Amit and Vidya in a new profit-sharing agreement
    • Vidya's new share is 6/20

    Admission of a New Partner

    • Paresh and Prabhav have debtors of ₹ 6,20,000 and a provision for doubtful debts of ₹ 20,000
    • Debtors worth ₹ 15,000 are written off due to revaluation
    • The correct journal entry is:
      • Bad Debts A/c Dr. 15,000
      • To Sundry Debtors A/c 15,000
      • Revaluation A/c Dr 15,000
      • To Provision for Doubtful Debts A/c 15,000

    Goodwill Calculation

    • Manav, Nath, and Narayan share profits and losses in a ratio of 4:3:2.
    • Nath retires and goodwill is valued at ₹ 21,600
    • The journal entry for goodwill adjustment is:
      • Manav's Capital A/c Dr. 3,900
      • Narayan's Capital A/c Dr. 3,300
      • To Nath's Capital A/c 7,200
    • Manav and Narayan's new profit-sharing ratio is 13:11

    Goodwill Upon Changing Profit Sharing Ratio

    • Janak, Chaman, and Anmol share profits and losses in a ratio of 3:2:1.
    • They change their profit-sharing ratio to 2:2:1.
    • Goodwill is valued at ₹ 60,000
    • The journal entry for goodwill accounting is:
      • Chaman's Capital A/c Dr. 4,000
      • Anmol's Capital A/c Dr. 1,875
      • To Janak's Capital A/c 5,875

    Profit & Loss Appropriation Account

    • Sahil, Sukesh, and Mohan share profits in a ratio of 3:3:4
    • Sahil contributes ₹ 6,00,000
    • Sukesh contributes ₹ 6,00,000
    • Mohan contributes ₹ 8,00,000

    Journal Entries and Calculations

    • John and Roberts receive interest on capital at 6%
    • Interest on drawings is charged at 8%
    • A gain of 600 re-issued shares is transferred to Capital Reserve

    Share Capital and Forfeiture

    • As. Ltd. issues 3,20,000 shares
    • 400 shares are forfeited
    • 300 shares are re-issued at 7 as fully paid

    Partner's Capital Account

    • Leena, Madan, and Naresh are partners.
    • Their respective Capital A/c have entries for:
      • Deferred Advertisement Expenditure A/c
      • Revaluation A/c
      • Investments A/c
      • Bank A/c

    Bad Debts and Revaluation

    • P, Q, and R are partners.
    • Bad debts worth ₹ 5,000 are written off
    • A provision for doubtful debts of ₹ 3,750 is created

    Statement of Cash Flows Entries

    • Cash outflows are recorded for:
      • Purchase of Land & Building
      • Purchase of Goodwill
      • Loans and Advances Given
    • Cash inflows are recorded for:
      • Proceeds from Sale of Non-Current Investments
      • Proceeds from issue of shares
      • Securities Premium

    Goodwill Account

    • The Goodwill A/c is credited with profit from the Statement of Profit & Loss
    • Goodwill is valued at ₹ 6,40,000

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    Description

    This quiz covers key concepts related to profit-sharing ratio changes, admission of a new partner, and calculations involving goodwill. Test your understanding of journal entries and adjustments in partner shares in a partnership. Can you navigate through the financial implications of these scenarios?

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