A and B are partners sharing profits and losses as 2: 1. C is admitted and profit sharing ratio becomes 4: 3: 2. Goodwill is valued at ₹94,500. C brings required goodwill in cash. Record necessary journal entries for treatment of Goodwill.
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Answer:
New PSR= 4:3:2
Old PSR= 2:1
Sacrificing Ratio:
A=2/3-4/9=2/9
B=1/3-3/9=0
goodwill brought by C=2/9*94500=21000
Journals:
Cash Ac.... Dr. 21000
To Goodwill Premium Ac. 21000
Goodwill Premium Ac.... Dr. 21000
To A's Capital Ac. 21000
Note: B will not get goodwill premium as he didn't sacrificed from his Profit sharing ratio
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