Question

Q. 29. Partners A, B and C share the profit of a business in the ratio of 3: 2:1 respectively. For one-sixth share they admit D who brings in 72,00,000 including *60,000 for his share of goodwill. Show the journal entries if A, B, C and D decide to share the profits respectively in the ratio of
(a) 15:10:5:6;
(b) 5:3:2:2,
(c) 2:2:1:1.
Assume that the entire cash brought in by D remains in the business. Give Journal entries.​

Answer 1

Explanation:

Working Note:

Calculation of hidden goodwill:

Total Capital of the firm after admission= 50000+50000+80000+40000

= 220000

Total capital of the firm based on Z's capital= 80000 * 4/1

= 320000

Hidden goodwill= 320000-220000= 100000

Z's share of Goodwill= 100000 * 1/4= 25000

JOURNAL

1. Cash a/ Dr. 80000

To Z's Capital a/c 80000

(Being capital brought in by Z)

2. Z's Capital a/c Dr. 25000

To X's Capital a/c 12500

To Y's Capital a/c 12500

(:1)

Answer 2

Explanation:

Q. 29. Partners A, B and C share the profit of a business in the ratio of 3: 2:1 respectively. For one-sixth share they admit D who brings in 72,00,000 including *60,000 for his share of goodwill. Show the journal entries if A, B, C and D decide to share the profits respectively in the ratio of

(a) 15:10:5:6;

(b) 5:3:2:2,

(c) 2:2:1:1.

Assume that the entire cash brought in by D remains in the business. Give Journal entries.