Crow and sparrow were partners in a firm sharing profits in the ratio of 5:3 They admitted parrot as a partner for 1/4th share in the profits of the firm which he acquired from crow and sparrow in the ratio of 3:2 parrot broughts Rs. 3,00,000 for his capital and necessary amount of goodwill in cash for his share in the firm. They goodwill of the firm was valued at Rs. 1,60,000.
Calculate new profit sharing ratio of crow, sparrow and parrot and pass necesary Journal entries in the books of the firm for the above transaction.
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New ratio will be 19:11:10
Bank a/c. dr. 3,40,000
to parrot's cap. a/c. 3,00,000
to premium for goodwill a/c. 40,000
Premium for goodwill a/c. dr. 40,000
to crow's cap.a/c. 24,000
to sparrow's cap.a/c. 16,000
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