Question

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?​

Answer 1

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(Being half of the premium for goodwill withdrawn by the partners)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