Question

6. A and B are partners sharing profits equally. They admit C into partnership; C paying only

` 1,000 for premium out of his share of premium of ` 1,800 for 1/4th share of profit. Goodwill Account

appears in the books at ` 6,000. All the partners have decided that goodwill should not appear in the

new firm’s books. Give necessary Journal entries. ​

Answer 1

Answer:

calculating new profit sharing ratio =

  C 's share =  1/4

  A's share = 1/2 * 3/4 = 3/ 12

  B's share = 1/2 * 3/4 = 3/12

new ratio   A : B : C

              3/12 : 3/ 12 : 1/4

              = 3: 3 : 3

MEANS EQUALLY

Entry  at the time of admission ;-

  cash a/c    Dr    1000

  c's capital a/c  Dr  800

      to premium for goodwill   1800

if partners decided that goodwill not shown in the books of  a/c then they will distribute goodwill in their gaining and sacrificing ratio here A and B sacrifice equally

A sacrifice = 6000 * 1/2 = 3000

B sacrifice = 6000* 1/2 = 3000

 entry of goodwill :---------------

    C 's capital a/c    dr     6000

      To  A ' s capital a/c             3000

      To B 's capital a/c               3000