Question

A and B are partners in a firm, and their profit sharing ratio is 2 : 1. C is admitted as a new partner for `1/4`th share in the profits. The following entry is passed when C brought ₹ 1,80,000 as his share of goodwill and credited to A and B:

Date	Particulars	L.F.	Dr. Amount ₹	Cr. Amount ₹
	Premium for Goodwill A/c   ...Dr.		1,80,000
	To A’s Capital A/c			1,35,000
	To B’s Capital A/c			45,000
	(C’s share of premium for goodwill transferred to A and B in their sacrificing ratio)

Calculate the new profit sharing ratio.

Answer 1

Sacrifice ratio = 1,35,000 : 45,000 or 3 : 1

Sacrifice made by A = `1/4 xx 3/4`

= `3/16`

Sacrifice made by B = `1/4 xx 1/4`

= `1/16`

New Share of Old Partners = Old Share − Sacrificed Share

New Share of A = `2/3 - 3/16`

= `(2 xx 16)/(3 xx 16) - (3 xx 3)/(16 xx 3)`

= `32/48 - 9/48`

= `(32 - 9)/48`

= `23/48`

New Share of B = `1/3 - 1/16`

= `(1 xx 16)/(3 xx 16) - (1 xx 3)/(16 xx 3)`

= `16/48 - 3/48`

= `(16 - 3)/48`

= `13/48`

New Share of C = `1/4`

= `(1 xx 12)/(4 xx 12)`

= `12/48`

New profit-sharing ratio = `23/48 : 13/48 : 12/48` or 23 : 13 : 12