# Give Journal Entries and Also Calculate Future Profit-sharing Ratio of the Partners. - Accountancy

Journal Entry

A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays ₹ 40,000 as capital and the necessary amount of goodwill which is valued at ₹ 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.
Give Journal entries and also calculate future profit-sharing ratio of the partners.

#### Solution

 Journal Date Particulars L.F. Debit Amount Rs Credit Amount Rs Cash A/c Dr. 52,000 To C’s Capital A/c 40,000 To Premium for Goodwill A/c 12,000 (C brought Capital and his share of goodwill in cash) Premium for Goodwill A/c Dr. 12,000 To A’s Capital A/c 6,000 To B’s Capital A/c 6,000 (C’s share of Goodwill distributed in A and B)

Working Notes-
WN1 : Sacrificing Ratio = A : B
= 1/10 : 1/10 = 1 : 1
WN 2 : Calculation of new profit sharing Ratio
Old Ratio = A : B
= 5 : 3
New Ratio = Old Ratio - Sacrificing Ratio
A's = 5/8 - 1/10 = 21/40

B's = 3/8 - 1/10 = 11/40

New Profit Sharing Ratio = A : B : C

= 21/40 : 11/40 : 1/5

= [ 21 : 11 : 8 ]/40
WN 3 = Distribution of C's share of Goodwill ( in Sacrificing Ratio)
A and B each will get = 12,000 x 1/2 = Rs. 6,000

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
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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 25 | Page 87