Question

A and B are partners in a firm sharing profits and losses in the ratio of 5:3. A surrenders
1/20th of his share, whereas B surrenders 1/24th of his share in favour of C, a new partner.
atio
the
Calculate new profit-sharing ratio and the sacrificing ratio.
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Answer 1

Answer:

Explanation:

                                                 JOURNAL

1. Cash a/c.....                                   Dr.                    21000

            To Premium for goodwill a/c                                21000

(Being Premium for goodwill brought in by C)

2. Premium for goodwill a/c....        Dr.                   21000

                To A's Capital a/c                                             9000

                 To B's Capital a/c                                             12000

(Being premium for goodwill brought in by C, distributed among the partners in the ratio 3:4)

Working Note:

A's old share= 3/5

B's old share= 2/5

C is admitted as a new partner.

A's sacrifice= 3/5 * 1/5

                  = 3/25

B's sacrifice= 2/5 * 2/5

                   = 4/25

Sacrificing ratio= 3:4

C's share= 3/25 + 4/25

              = 7/25

Hence, C's share of goodwill= 7/25 * 75000

                                               = 21000