A and B were partners in a firm sharing profits and losses in the ratio of 3:2. They admitted C as a new partner for 3/7th share in the profits and the new profit sharing ratio will be 2:2:3. C brought Rs.4,00,000 as his capital and Rs.3,00,000 as premium for goodwill. Half of their share of premium was withdrawn by A and B from the firm. Calculte sacrificing ratio and give necessary journal entries.
Answers
Answer:
JOURNAL
1. Cash a/c..... Dr. 21000
To Premium for goodwill a/c 21000
(Being Premium for goodwill brought in by C)
2. Premium for goodwill a/c.... Dr. 21000
To A's Capital a/c 9000
To B's Capital a/c 12000
(Being premium for goodwill brought in by C, distributed among the partners in the ratio 3:4)
Working Note:
A's old share= 3/5
B's old share= 2/5
C is admitted as a new partner.
A's sacrifice= 3/5 * 1/5
= 3/25
B's sacrifice= 2/5 * 2/5
= 4/25
Sacrificing ratio= 3:4
C's share= 3/25 + 4/25
= 7/25
Hence, C's share of goodwill= 7/25 * 75000
= 21000