A and b are partners sharing profits and losses in the ratio 4:1they admit c into partnership for 1/6 share of which are pays rs. 20000 for goodwill a b and c decided to share profit in the ratio of 3:2:1 give necessary journal entries
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cash account ...... Dr 20,000
to premium for goodwill 20,000
premium for goodwill account..... Dr. 20,000
B's capital account Dr. 16,000
to A's capital account 36,000
sacrifice = old share - new share
A = 4/5 - 3/6 = 9/30
B = 1/5 - 2/6 = (4/30)
B is a gaining partner hence he has to contribute the amount sacrificed by the partner A after changing ratio
B's contribution = 20,000×6/1 = 1,20,000 (total goodwill)
B's contribution= 1,20,000×4/30 = 16,000
if a partner gains he has to be debited
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