Question

Aditya and Balan are partners sharing profits and losses in 3:2 ratio. They admitted Christopher for 1/4 share in the profits. The new profit sharing ratio agreed was 2:1:1. Christopher brought Rs. 50,000 for his capital. His share of goodwill was agreed to at Rs. 15,000. Christopher could bring only Rs. 10,000 out of his share of goodwill. Record necessary journal entries in the books of the firm?

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Cash A/c		60,000	-
	To Christopher’s Capital A/c		-	50,000
	To Premium for Goodwill A/c		-	10,000
	(Being Amount of Capital and Premium for Goodwill brought by Christopher)
	Premium for Goodwill A/c		10,000	-
	Christopher’s Capital A/c		5,000	-
	To Adiya’s Capital A/c		-	6,000
	To Balam’s Capital A/c		-	9,000
	(Being Goodwill Christopher’s Share taken by Old Partner’s in Sacrificing Ratio)

Working note:

Sacrificing Ratio = Old Ratio − New Ratio

Aditya = `3/5 - 2/4 = [12 - 10]/20 = 2/20`

Balam = `2/5 - 1/4 = [8 - 5]/20 = 3/20`

Sacrificing Ratio = `2/20 : 3/20`

= 2 : 3