P and Q are partners in a firm sharing profit in ratio 5:3. Pass goodwill of firm valued at Rs.40,000. Pass journal for goodwill?
Answers
Answer:
Cash a/c... Dr. 52000
To Qs Capital a/c 40000
To Premium for Goodwill a/c 12000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c.... Dr. 12000
To Ps Capital a/c 6000
To Qs Capital a/c 6000
(Being premium for goodwill brought in by Q distributed among the partners in the ratio of
1:1
Working Note:
1. A's sacrifice= 1/10
B's sacrifice= 1/10
Therefore, Sacrificing ratio= 1:1
2. Distribution of C's goodwill in sacrificing ratio
A's share= 12000 * 1/2= 6000
B's share= 12000 * 1/2= 6000
(ii) Calculation of new profit sharing ratio:
A's new share= 5/8- 1/10= 21/40
B's new share= 3/8- 1/10= 11/40
C's share= 1/5
New Profit sharing ratio= 21:11:8