Question

A and B are partners in a firm. They admit C as a partner with 1/5th share in the profits of the firm.

C brings ₹ 4,00,000 as his share of capital. Calculate the value of C’s share of Goodwill on the

basis of his capital, given that the combined capital of A and B after all adjustments is ₹ 10,00,000.​

Answer 1

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