Question

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings in ₹ 30,000 as capital and ₹ 10,000 as goodwill. At the time of admission of C, goodwill appears in the Balance Sheet of A and B at ₹ 3,000. The new profit-sharing ratio of the partners will be 5 : 3 : 2. Pass necessary journal entries.

Answer 1

A's Debited by = $3,000 \times \frac{3}{5}$ = $1,800$

B's Debited by = $3,000 \times \frac{2}{5}$ = $1,200$

Explanation:

Old Ratio A and B = $3: 2$

New Ratio A, B and C = $5: 3: 2$

Sacrificing Ratio = Old Ratio - New Ratio

A's Sacrificing Ratio = $\frac{3}{5}-\frac{5}{10}=\frac{6-5}{10}=\frac{1}{10}$

B's Sacrificing Ratio = $\frac{2}{5}-\frac{5}{10}=\frac{4-5}{10}=\frac{1}{10}$

Sacrificing Ratio A and B = $\frac{1}{10}: \frac{1}{10}=1: 1$

Distribution of Premium for Goodwill C's share of Goodwill

A and B each will get = $10,000 \times \frac{1}{2}$ = $5,000$ each

Goodwill written-off

A's Debited by $3,000 \times \frac{3}{5}$ = $1,800$

B's Debited by $3,000 \times \frac{2}{5}$ = $1,200$

Answer 2

Answer:

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