Q31. M and N are partners sharing profit in the ratio of 3:1. They admit O as a new partner on 1st A

Q: What is the correct answer for CUET UG Accountancy Q31?

The correct answer is d. Old Ratio (M:N) = 3:1New Ratio (M:N:O) = 2:2:1O's share of Premium for Goodwill = ₹40,000 for 1/5th share.Total Goodwill of the firm = ₹40,000 * 5 = ₹2,00,000.Sacrificing Ratio = Old Share - New ShareM = 3/4 - 2/5 = (15 - 8) / 20 = 7/20 (Sacrifice)N = 1/4 - 2/5 = (5 - 8) / 20 = -3/20 (Gain)Since N is gaining, N's capital account will be debited for his share of goodwill. M's capital account will b

Q: Q31. M and N are partners sharing profit in the ratio of 3:1. They admit O as a new partner on 1st April, 2022. O brings 40,000 as his share of premium and the new profit-sharing ratio is 2:2:1.…

The correct answer is d. Old Ratio (M:N) = 3:1New Ratio (M:N:O) = 2:2:1O's share of Premium for Goodwill = ₹40,000 for 1/5th share.Total Goodwill of the firm = ₹40,000 * 5 = ₹2,00,000.Sacrificing Ratio = Old Share - New ShareM = 3/4 - 2/5 = (15 - 8) / 20 = 7/20 (Sacrifice)N = 1/4 - 2/5 = (5 - 8) / 20 = -3/20 (Gain)Since N is gaining, N's capital account will be debited for his share of goodwill. M's capital account will b

Q: What are the options for this CUET UG Accountancy question?

A. M's Capital A/c Dr. ₹30,000 Premium for Goodwill A/c Dr. ₹40,000 To N's Capital A/c ₹70,000 · B. M's Capital A/c Dr. ₹40,000 N's Capital A/c Dr. ₹30,000 To Premium for Goodwill A/c ------- ₹70,000 · C. Premium for Goodwill A/c Dr ₹70,000 To M's Capital A/c ₹40,000 To N's Capital A/c -- ₹30,000 · D. Premium for Goodwill A/c Dr ₹40,000 N's Capital A/c Dr. ------ ₹30,000 To M's Capital A/c ₹70,000

Question

Q31. M and N are partners sharing profit in the ratio of 3:1. They admit O as a new partner on 1st April, 2022. O brings 40,000 as his share of premium and the new profit-sharing ratio is 2:2:1. Identify the correct option related to treatment of Goodwill.
(a) M's Capital A/c Dr. ₹30,000
Premium for Goodwill A/c Dr. ₹40,000
To N's Capital A/c ₹70,000
(b) M's Capital A/c Dr. ₹40,000
N's Capital A/c Dr. ₹30,000
To Premium for Goodwill A/c ------- ₹70,000
(c) Premium for Goodwill A/c Dr ₹70,000
To M's Capital A/c ₹40,000
To N's Capital A/c -- ₹30,000
(d) Premium for Goodwill A/c Dr ₹40,000
N's Capital A/c Dr. ------ ₹30,000
To M's Capital A/c ₹70,000

FirstInTest · Accepted Answer

Old Ratio (M:N) = 3:1New Ratio (M:N:O) = 2:2:1O's share of Premium for Goodwill = ₹40,000 for 1/5th share.Total Goodwill of the firm = ₹40,000 * 5 = ₹2,00,000.Sacrificing Ratio = Old Share - New ShareM = 3/4 - 2/5 = (15 - 8) / 20 = 7/20 (Sacrifice)N = 1/4 - 2/5 = (5 - 8) / 20 = -3/20 (Gain)Since N is gaining, N's capital account will be debited for his share of goodwill. M's capital account will be credited for O's premium for goodwill and N's share of goodwill (compensation to M for sacrifice).Amount credited to M's Capital A/c = Total Goodwill * M's Sacrificing Share = ₹2,00,000 * 7/20 = ₹70,000.Amount debited to N's Capital A/c = Total Goodwill * N's Gaining Share = ₹2,00,000 * 3/20 = ₹30,000.Journal Entry:Premium for Goodwill A/c Dr. ₹40,000N's Capital A/c Dr. ₹30,000To M's Capital A/c ₹70,000This entry matches option (d).

Answer

M's Capital A/c Dr. ₹30,000 Premium for Goodwill A/c Dr. ₹40,000 To N's Capital A/c ₹70,000

Answer

M's Capital A/c Dr. ₹40,000 N's Capital A/c Dr. ₹30,000 To Premium for Goodwill A/c ------- ₹70,000

Answer

Premium for Goodwill A/c Dr ₹70,000 To M's Capital A/c ₹40,000 To N's Capital A/c -- ₹30,000

Answer

Premium for Goodwill A/c Dr ₹40,000 N's Capital A/c Dr. ------ ₹30,000 To M's Capital A/c ₹70,000

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