Question

A and B are partners sharing profits in the ratio of 3 : 2. Goodwill appears in their

books at` 36,000. They admit C into partnership, C paying ` 80,000 for capital and a

premium of ` 12,000 for 1/4th share of the profits. A, B and C decided to share

the future profits in the ratio of 3 : 3 : 2.

Give journal entries to record the above arrangement in the books of the firm.​

Answer 1

Answer:

At the time of admission of a new partner, goodwill brought in by new partner is distributed among old partner in their old ratio.

Goodwill brought in by new partner = Total goodwill of firm * C's share of profit

Goodwill brought in by new partner = Rs. 9600 * (1/4) = Rs. 2400

Goodwill brought in by C on his admission is distributed among A and B in their old ratio i.e., 3 : 2

Amount withdrawn by-

A = Rs. 2400 * (3/5) = 1440

B = Rs. 2400 * (2/5) = 960