Question

9. A and B are partners in a firm sharing profits and losses in the proportion of 3/4th and 1/4th respectively. On 1st April,

2016, they take C into partnership for 1/5th share of profits. C acquires his share from A and B in the ratio of 2 : 1.

Value of goodwill is determined at ₹ 24,000. At present, C is not in a position to bring in any amount towards

goodwill.

Give necessary Journal entries under the following alternatives cases:

Case 1. When the Goodwill Account appears at ₹ 10,000 in the books of the firm.

Case 2. When Goodwill Account is not appearing in the books of the firm. t.s grewal​

Answer 1

Answer:

Old ratio (A and B) = 3 : 2

C is admitted for 1/4 share

Let the combined share of A, B and C = 1

Combined share of A and B after C's admission = 1 - C's share

= 1 - (1/4) = 3/4

New share :

A = (3/4) * (1/2) = 3/8

B = (3/4) * (1/2) = 3/8

C = 1/4

Therefore, A : B : C = 3/8 : 3/8 : 1/4

= 3 : 3 : 2

Sacrificing ratio = Old ratio - New ratio

A's sacrifice = (3/5) - (3/8) = 9/24

B's sacrifice = (2/5) - (3/8) = 1/24

Therefore, sacrificing ratio of A and b is 9 : 1