A and B are partners in a firm sharing
profits in ratio 3:2. They admit C as a
partner with effect from 1st April, 2017 for
1/5th share. C acquired his share from A and
B in ratio 2:3. Goodwill of the firm is valued
at 5 years. Purchase of super profits is
based on avg profit of last 3 years. Avg
profits and normal profits are 350000 and
200000 respectively. Goodwill already appears
in the book at 50000. C only brings in 60%
of his share of firm's goodwill and 1000000
as his capital by bank draft. 50% of the
goodwill is withdrawn by the partners. Pass
necessary journal entries.
Answers
Explanation:
ANSWER
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
Explanation:
the process by which green plant make their own food is called photosynthesis