# Calculate Proportion in Which Partners Would Share Profits and Losses in Future - Accountancy

Journal Entry

A and B are partners in a business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2019, their capitals were ₹ 8,000 and ₹ 10,000 respectively. On that date, they admit C in partnership and give him 1/4th share in the future profits. C brings ₹ 8,000 as his capital and ₹ 6,000 as goodwill. The amount of goodwill is withdrawn by the old partners in cash. Draft the journal entries and show the Capital Accounts of all the Partners. Calculate proportion in which partners would share profits and losses in future.

#### Solution

 Journal Date Particulars L.F. Debit Amount (₹) Credit Amount (₹) 2019 April 1 Cash A/c Dr. 14,000 To C’s Capital A/c 8,000 To Premium for Goodwill A/c 6,000 (C brought capital and his share of goodwill) April 1 Premium for Goodwill A/c Dr. 6,000 To A’s Capital A/c 2,000 To B’s Capital A/c 4,000 (C’s share of goodwill distributed betweenA and B in sacrificing ratio i.e. 1:2) A’s Capital A/c Dr. 2,000 B’s Capital A/c Dr. 4,000 To Cash A/c 6,000 (Amount of goodwill withdrawn by A and B)

 Partners’ Capital Accounts Dr. Cr. Particulars A B C Particulars A B C Cash 2,000 4,000 Balance b/d 8,000 10,000 Cash 8,000 Premium for Goodwill 2,000 4,000 Balance c/d 8,000 10,000 8,000 10,000 14,000 8,000 10,000 14,000 8,000

Calculation of New (Future) Ratio

Old Ratio = A : B
= 1/3 : 2/3

C is admitted for  1/4  share of profit

Let combined share of all partners after C’s admission be = 1

Combined share of A and B after C’s admission = 1 − C’s share
= 1 - 1/4

= 3/4

New Ratio = Old Ratio x Combined Share of A and B in the new firm

A's = 1/3 xx 3/4 = 3/12

B's = 2/3 xx 3/4 = 6/12

New Profit Sharing Ratio = A :  B : C
= 3/12 : 6/12 : 1/4

= [ 3 : 6 : 3]/12

= 1 : 2 : 1

A will get = Rs. 6,000 x 1/3 = Rs. 2,000

B will get = Rs.6,000 x 2/3 = Rs. 4,000

Concept: Adjustment for Accumulated Profits and Losses
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#### APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 5 Admission of a Partner
Exercise | Q 32 | Page 89