A and B were partner in a firm sharing profits in the ratio 4:1 they admit C as a new partner on 1-3-2019 for 1/5th share.it was decided that A B ans C share future profit in the ratio 5:3:2 . C brought ₹20000 in cash and machine worth ₹60000for his share of profit as premium for goodwill showing your calculations clearly pass necessary journal entries in the books of the firm.
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a.bank a/c dr. 80000
to premium for goodwill a/c 60000
to c's capital a/c 20000
b. premium for goodwill a/c dr. 60000
to premium for goodwill a/c 45000
to c's capital a/c. 15000
Explanation:
1.sacrificing ratio of A= 4/5-5/10=3/10
sacrificing ratio of B=1/5-3/10= -1/10
2. calculation of goodwill
sacrificing ratio= 3:-1
goodwill- 60000
60000*3/4=45000
60000*1/4=15000
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