ILLUSTRATION 34.
X and Yare partners in a firm sharing profits in the ratio of 5:3. On March 1, 2017
they admitted their manager for the past ten years, as a new partner. The new profit
sharing ratio will be 4:3 : 2. Z brought in 21,00,000 in cash as his share of capital but
could not bring any amount for goodwill in cash. The firm's goodwill on Z s admission
was valued at 1,80,000. X and Y decided that Z can bring his share of premium for
goodwill later or it can be adjusted against his share of profits. At the time of Zs
admission goodwill existed in the books of the firm at 2,40,000.
You are required to (1) Pass necessary journal entries in the books of the firm on
Z's admission. (ii) Identify the value fulfilled by X and Y.
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