Question

V and K are partners sharing profits and losses in the ratio 4:1. They admit S into the firm. S
brings Rs 1,50,000 for his goodwill share. They decided to share future profits and losses
equally. Pass the necessary journal entries.
State the amount by which V and K will be credited/debited for the share of the premium for
goodwill​

Answer 1

Explanation:

At the time of admission of a new partner, goodwill brought in by new partner is distributed among old partner in their old ratio.

Goodwill brought in by new partner = Total goodwill of firm * C's share of profit

Goodwill brought in by new partner = Rs. 9600 * (1/4) = Rs. 2400

Goodwill brought in by C on his admission is distributed among A and B in their old ratio i.e., 3 : 2

Amount withdrawn by-

A = Rs. 2400 * (3/5) = 1440

B = Rs. 2400 * (2/5) = 960