A and B were partners in a firm sharing profits and losses in the ration of 5:3. They admitted C as new partner. A surrendered 1/3rd of his share in favour of C and B surrendered 1/4th of his share i 10, favour of C. C brought 1,50,000 for his capital and 758,000 for his share of goodwill. Calculate new profit sharing ratio of A, B and C, sacrificing ratio of A and B and pass necessary journal entries for the above transactions.
Answers
Answer:
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