Question

Aru and Beena are partners in a firm sharing profits in the ratio of 2 : 1. They admit Charu and Divya as two new partners. The new profit sharing ratio is agreed at 4 : 3 : 2 : 1. Charu introduced ₹ 5,00,000 and Diya ₹ 3,00,000 as their capitals.

Charu brings in ₹ 60,000 in cash for her share of goodwill but Diya is unable to bring her share of goodwill in cash.

Pass necessary journal entries.

Answer 1

Journal Entry
Date	Parliculars	L.F.	Debit (₹)	Credit (₹)
	Bank A/c   ...Dr.		8,00,000
	To Charu’s Capital A/c			5,00,000
	To Divya’s Capital A/c			3,00,000
	(Capital contributed by partners)
	Bank A/c   ...Dr.		60,000
	To Premium for Goodwill A/c			60,000
	(Premium for goodwill brought in by Charu)
	Premium for Goodwill A/c   ...Dr.		60,000
	Divya’s Current A/c   ...Dr.		30,000
	To Aru’s Capital A/c			80,000
	To Beena’s Capital A/c			10,000
	(Goodwill credited to old partners in their sacrificing ratio of 8 : 1)

Working Note:

Charu pays ₹ 60,000 for her `2/10` share of profit.

As such Total Goodwill of the Firm = `60,000 xx 10/2`

= 3,00,000

Divya’s share of goodwil = `3,00,000 xx 1/10`

= 30,000

Calculate Sacrificing Ratio:

Sacrificing Ratio = Old Ratio − New Ratio

Aru = `2/3 - 4/10`

= `(2 xx 10)/(3 xx 10) - (4 xx 3)/(10 xx 3)`

= `20/30 - 12/30`

= `(20 - 12)/30`

= `8/30`

Beena = `1/3 - 3/10`

= `(1 xx 10)/(3 xx 10) - (3 xx 3)/(10 xx 3)`

= `10/30 - 9/30`

= `(10 - 9)/30`

= `1/30`

Sacrificing Ratio of Aru and Beena = `8/30 : 1/30` or 8 : 1

Goodwill credited to Aru and Beena:

Aru’s share from Charu = `60,000 xx 8/9`

= 53,333

Beena’s share from Charu = `60,000 xx 1/9`

= 6,667

Aru’s share from Divya = `30,000 xx 8/9`

= 26,667

Beena’s share from Divya = `30,000 xx 1/9`

= 3,333

Total goodwill credited to Aru and Beena:

Aru = 53,333 + 26,667

= 80,000

Beena = 6,667 + 3,333

= 10,000