Question

for 1/4th share of profits which he acquires 1/6th from E and 1/12th from
23. 8 and Care in partnership sharing profits and losses as 3 : 1. They admit D into the firm, D paying a
premium of 15,000 for 1/3rd share of the profits. As between themselves & and C agree to share the
future profits and losses equally, Draft Journal entries showing appropriations of the premium money.
Ans. Dr. Premium for Goodwill Alc-15,000 and C's Capital Alc-3,750) Cr. B's Capital Alc--18,7501
nartners in a firm sharing profits in the ratio of 3:2. They admit R as a new partner. The​

Answer 1

Answer:

ANSWER

JOURNAL

1. Cash a/c.... Dr. 15000

To Premium for Goodwill a/c 15000

(Being premium for goodwill brought in by D)

2. Premium for Goodwill a/c... Dr. 15000

To B's Capital a/c 15000

(Being premium brought in by D transferred to B's capital)

3. C's Capital a/c... Dr. 3750

To B's Capital a/c 3750

(Being goodwill charged from C due to his gain in profit sharing)

Working Note:

1. Calculation of sacrificing ratio:

D is admitted for 1/3rd share

Remaining share= 1-[1/3]

= 2/3

B and C agree to share profits equally in future.

Hence, B's new share= 2/3 * 1/2 = 1/3

C's new share= 2/3 * 1/2 = 1/3

B's sacrifice= 3/4- 1/3

= 5/12

C's gain= 1/4- 1/3

= -1/12

2. D brings in 15000 as goodwill for 1/3rd share in profit.

Therefore total goodwill of the firm= 15000 * 3/1

= 45000

C's share of goodwill= 45000 * 1/12

= 3750

Explanation:

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