Q. 14 (B). A and B are partners sharing profit in the ratio of 5: 3. C is admitted to
the partnership for 1/4th share of future profits. Calculate the new profit sharing ratio
TANS.
and the sacrificing ratio.
1
Answers
Answer:
ANSWER
(i) JOURNAL
1. Cash a/c... Dr. 52000
To C's 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 A's Capital a/c 6000
To B's Capital a/c 6000
(Being premium for goodwill brought in by C 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
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