Question

X and Y are partners sharing profits in the ratio of 3 : 1. Z is admitted as a partner for which he pays ₹ 30,000 for goodwill in cash. X, Y and Z decided to share the future profits in equal proportion. You are required to pass a single journal entry to give effect to the above arrangement.

Answer 1

X's and Y's Sacrificing Ratio is $\frac{5}{12}$ and $\frac{-1}{12}$ and Goodwill of the firm on the basis of Y's Share is ${Rs} .37,500.$

Explanation:

1) Sacrificing Ratio = Old Ratio-New Ratio

  X's Sacrificing Ratio $=\frac{3}{4}-\frac{1}{3}=\frac{9-4}{12}=\frac{5}{12}$ (Sacrifice)

   Y's Sacrificing Ratio $-\frac{1}{4}-\frac{1}{3}=\frac{3-4}{12}=\frac{-1}{12}$ (Gain)

2) Goodwill of the firm on the basis of Z's Share $=30,000 \times \frac{3}{1}=90,000$

    Y's Gain $=90,000 \times \frac{1}{12}=z 7,500$

    X's will get Z's share of Goodwill = Y's share of gain

   i.e. $30,000+7,500=\mathrm{Rs} .37,500$