A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/15th share of his profit in favour of C and B surrenders 2/15th of his share in favour of C. What is there new ratio and explain how?
Answers
Answer:
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
Explanation:
Solution :
★ Old Ratio :
A : B = 3 : 2
- A's Share = 3/5
- B's Share = 2/5
• A surrenders 1/15 th share of his profit in favour of C :
⇒ 3/5 × 1/15 = 3/75
• B surrenders 2/15 th share of his profit in favour of C :
⇒ 2/5 × 2/15 = 4/75
C's Share =A's Sacrifice Share + B's Sacrifice Share
★ New Profit Sharing Ratio :
• A's New Share =
⇒ 3/5 - 3/75
⇒ (45 - 3)/75
⇒ 42/75
• B's New Share =
⇒ 2/5 - 4/75
⇒ (30 - 4)/75
⇒ 26/75
• C's Share =
⇒ 3/75 + 4/75
⇒ 7/75
New Profit Sharing Ratio =
- A : B : C
- 42/75 : 26/75 : 7/75
⇒ 42 : 26 : 7
Therefore, New profit sharing ratio between A, B and C = 42 : 26 : 7.