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Question
A and B were partners with capitals of ₹ 6,00,000 and ₹ 4,00,000, respectively. C was admitted for a `1/5`th share in profits. The journal entry recorded for the premium for goodwill brought in by C is given below:
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| Premium for Goodwill A/c ...Dr. | 2,00,000 | |||
| To A’s Capital A/c | 1,20,000 | |||
| To B’s Capital A/c | 80,000 | |||
| (Adjustment for premium for goodwill brought in by C) |
The new profit-sharing ratio will be:
Options
21 : 19 : 10
19 : 21 : 10
12 : 8 : 5
13 : 7 : 5
MCQ
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Solution
12 : 8 : 5
Explanation:
Calculate the Remaining Share of Profit:
Remaining Share = `1 - 1/5`
= `4/5`
Calculate the New Shares of A, B, and C:
A’s New Share = `4/5 xx 3/5`
= `12/25`
B’s New Share = `4/5 xx 2/5`
= `8/25`
C’s New Share = `1/5`
`(1 xx 5)/(5 xx 5)`
= `5/25`
The new profit sharing ratio is 12 : 8 : 5.
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Notes
The answer in the textbook is incorrect.
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