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17 Anil, Amar and Ankur are partners in a firm sharing profits in the ratio 2:2:1. OnMarch 31, 2019 Amardies. On this day the balance in their capital accountsstood at 1,10,000, 270,000 and 50,000 respectively and it was found thatPatents were undervalued by 20,000 which was to be considered. Amar'sexecutor was paid 90,000 in full settlement Calculate Amar's share of goodwilland pass Journal Entry for patents and goodwill.Anil and Ankur decided to share future profits equally |
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Answer» 1. Nitin's capital A/c 4000 Tarun's capital A/c 4000 To Amar's capital A/c 8000 (Being adjustment made for reserve assuming that there is no decrease in value of investments) 2. Nitin's capital A/c 4000 Tarun's capital A/c 4000 To Amar's capital A/c 8000 (Being adjustment made for reserve) 3. Nitin's capital A/c 2400 Tarun's capital A/c 2400 To Amar's capital A/c 4800 (Being adjustment made for reserve) 4. Investment fluctuation reserve A/c.................Dr. 30000 To Investments A/c 30000 (Being decrease in the market value of investment adjusted through reserve) Nitin's capital A/c 2000 Tarun's capital A/c 2000 To Amar's capital A/c 4000 (Being adjustment made for balance reserve) 5. Investment fluctuation reserve A/c.................Dr. 60000 PROFIT and Loss A/c.............................................Dr. 30000 To Investments A/c 90000 (Being decrease in the market value of investment adjusted through reserve) Notes: 1. Calculation of gaining and sacrificing ratio Nitin: 2/5 - 1/3 = 1/15 Tarun: 2/5 - 1/3 = 1/15 Amar: 1/5 - 1/3 = (2/15) 2. It is assumed that the partners DECIDE to maintain the investment reserve in future. |
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