(v) X and Y are partners sharing profits in the ratio of 3 : 2 with Capitals as ? 1,00,000 and 50,000
respectively. Z is admitted for 1/5th share of the profits. The amount Z brings as capital will be
Answers
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/c..... 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
(Being Z's share of goodwill distributed among the partners in the ratio of 1:1)