A and B are partners having capitals `2, 00,000 and `3, 00,000 respectively, sharing
profit and losses in the ratio of 3:2. They admitted C as a new partner for 1/4th share and
he brought `2, 00,000 as his share of capital. What would be the amount of
goodwill brought in by C?
Answers
JOURNAL
1. Cash a/c... Dr. 350000
To C's Capital a/c 200000
To Premium for Goodwill a/c 150000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c... Dr. 150000
To A's Capital a/c 110000
To B's Capital a/c 40000
(Being premium for goodwill distributed among the partners in the ratio of 11:4)
3. A's Capital a/c.... Dr. 55000
B's Capital a/c.... Dr. 20000
To Cash a/c 75000
(Being half of the premium for goodwill withdrawn by the partners)
Calculation of sacrificing ratio:
A's sacrifice= 3/5- 2/7= 11/35
B's sacrifice= 2/5- 2/7= 4/35
Sacrificing ratio= 11:4
Working Note:
Distribution of goodwill:
A's share= 150000 * 11/15= 110000
B's share= 150000 * 4/15= 40000