Question

1. (When new partner acquire his share form old partners as a fraction of their share). A and B are partners in a firm sharing profit and losses in the ratio of 5:3. A Surrenders 1/5th of his share, whereas B surrenders 1/3 of his share in favour of C, a new partner. Calculate the new profit sharing ratio.​

Answer 1

Explanation:

JOURNAL

1. Cash a/c..... Dr. 21000

To Premium for goodwill a/c 21000

(Being Premium for goodwill brought in by C)

2. Premium for goodwill a/c.... Dr. 21000

To A's Capital a/c 9000

To B's Capital a/c 12000

(Being premium for goodwill brought in by C, distributed among the partners in the ratio 3:4)

Working Note:

A's old share= 3/5

B's old share= 2/5

C is admitted as a new partner.

A's sacrifice= 3/5 * 1/5

= 3/25

B's sacrifice= 2/5 * 2/5

= 4/25

Sacrificing ratio= 3:4

C's share= 3/25 + 4/25

= 7/25

Hence, C's share of goodwill= 7/25 * 75000

= 21000

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