A and B are partners in a firm sharing profits in the ratio of 3:2. C is admitted as a Partner. A and B surrender 1/2 of their respective share in favour of C. Find the New Profit Sharing Ratio and Sacrificing Ratio. Is to bring his share of premium for goodwill in cash. The goodwill of the firm is estimated at Rs 400000. Pass necessary entries for the record
of goodwill in the above case.
Answers
Answer:
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:
I hope this helps you