A and B are in partnership sharing profits and losses in the ratio 5:3 C is admitted as a partner who pay 40000 as capital and the necessary mount of goodwill which is valued at 60000for the firm His share of profit will be 1/5 and which he takes 1/10 from A and 1/10 from B
paas journal entry also calculate future psr
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Asked on December 26, 2019 by
Geethasowmya Sanathra
A and B in partnership sharing profits and losses in the ratio of 5:3. C is admitted as a partner who pays Rs.40,000 as capital and the necessary amount of goodwill which is valued at Rs.60,000 for the firm. His share of profits will be 1/5
th
which he takes 1/10
th
from A and 1/10
th
from B.
Give Journal entries and also calculate future profit-sharing ratio of the partners.
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ANSWER
(i) JOURNAL
1. Cash a/c... Dr. 52000
To C's Capital a/c 40000
To Premium for Goodwill a/c 12000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c.... Dr. 12000
To A's Capital a/c 6000
To B's Capital a/c 6000
(Being premium for goodwill brought in by C distributed among the partners in the ratio of 1:1)
Working Note:
1. A's sacrifice= 1/10
B's sacrifice= 1/10
Therefore, Sacrificing ratio= 1:1
2. Distribution of C's goodwill in sacrificing ratio
A's share= 12000 * 1/2= 6000
B's share= 12000 * 1/2= 6000
(ii) Calculation of new profit sharing ratio:
A's new share= 5/8- 1/10= 21/40
B's new share= 3/8- 1/10= 11/40
C's share= 1/5
Answer:
. Cash a/c... Dr. 52000
To C's Capital a/c 40000
To Premium for Goodwill a/c 12000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c.... Dr. 12000
To A's Capital a/c 6000
To B's Capital a/c 6000
(Being premium for goodwill brought in by C distributed among the partners in the ratio of 1:1)
Working Note:
1. A's sacrifice= 1/10
B's sacrifice= 1/10
Therefore, Sacrificing ratio= 1:1
2. Distribution of C's goodwill in sacrificing ratio
A's share= 12000 * 1/2= 6000
B's share= 12000 * 1/2= 6000
(ii) Calculation of new profit sharing ratio:
A's new share= 5/8- 1/10= 21/40
B's new share= 3/8- 1/10= 11/40
C's share= 1/5