Question

A and B are partners sharing
profits in the ratio of 7:5. C is
admitted into the partnership
for 1/6 share which he acquires
1/24 from A and 1/8 from B. C
does not pay anything for his
share of goodwill. On C's
admission firm's goodwill was
valued at Rs. 1,80,000. Credit
will be given to:
​

Answer 1

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Calculation of sacrificing ratio:

A's sacrifice= 1/24

B's sacrifice= 1/8

Hence, Sacrificing ratio= 1:3

2. Distribution of premium for goodwill in sacrificing ratio:

A's share= 3600 * 1/4= 900

B's share= 3600 * 3/4= 2700

3. Calculation of new Profit sharing ratio:

A's new share= 7/12- 1/24= 13/24

B's new share= 5/12- 1/8= 7/24

C's share= 1/4

New profit sharing ratio= 13:7:4

4. Distribution of profit in new profit sharing ratio:

A's share= 24000 * 13/24= 13000

B's share= 24000 * 7/24= 7000

C's share= 24000 * 4/24= 4000