Advertisement Remove all ads

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.

Advertisement Remove all ads

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?
Advertisement Remove all ads

APPEARS IN

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

View all notifications


      Forgot password?
View in app×