# Journalise the Above Transactions. - Accountancy

Sum

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/5th of his share and B surrenders 2/5th of his share and B surrenders 2/5th of his share in favour of C. For the purpose of C's admission, goodwill of the firm is valued at ₹ 75,000 and C brings in his share of goodwill in cash which is retained in the firm's books. Journalise the above transactions.

#### Solution

 Date Particulars L.F. Debit Amount Rs Credit Amount Rs Cash A/c Dr. 21,000 To Premium for Goodwill A/c 21,000 (C brought Premium for Goodwill) Premium for Goodwill A/c Dr. 21,000 To A’s Capital A/c 9,000 To B’s Capital A/c 12,000 (Premium for Goodwill brought by C distributed between A and B in sacrificing ratio i.e. 3:4)

Old Ratio = A : B = 3 : 2
A's Sacrificing = 3/5 xx 1/5 = 3/25

B's Sacrificing = 2/5 xx 2/5 = 4/25

Sacrificing Ratio = A : B
= 3/25 : 4/25 = 3 : 4

New Ratio = Old Ratio - Sacrificing Ratio
A's = 3/5 - 3/25 = 12/25

B's = 2/5 - 4/25 = 6/25

C’s share = A’s sacrifice + B’s sacrifice
= 3/25 + 4/25 = 7/25

New Ratio is 12 : 6 : 7
C’s will bring Premium for Goodwill = 75,000 x 7/25
= Rs. 21,000
Distribution of Premium for Goodwill =
A will get = 21,000 x 3/7 = Rs. 9,000

B will get = 21,000 x 4/7 = Rs. 12,000.

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
Is there an error in this question or solution?

#### APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 5 Admission of a Partner
Exercise | Q 21 | Page 87