Question

E and F were partners in a firm sharing profits in the ratio of 3 : 1. They admitted G as a new partner on 1st April, 2019 for 1/3rd share. It was decided that E, F and G will share future profits equally. G brought ₹ 50,000 in cash and machinery valued at ₹ 70,000 as premium for goodwill.
Pass necessary Journal entries in the books of the firm.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 April 1	Cash A/c	Dr.		50,000
	Machinery A/c	Dr.		70,000
	To Premium for Goodwill A/c				1,20,000
	(G brought cash Rs 50,000 and Machinery Rs 70,000 for his share of Goodwill)
April 1	Premium for Goodwill A/c	Dr.		1,20,000
	To E’s Capital A/c				1,20,000
	(G share of goodwill transferred to E’s Capital Account)
April 1	F’s Capital A/c	Dr.		30,000
	To E’s Capital A/c				30,000
	(F’s share of gain in goodwill charged from his capital and transferred to E’s capital)

Working Notes : 
WN 1:
Old Ratio = E : F
                   3  :  1 
                   E : F : G
New Ratio = 9 : 1 : 1

Sacrificing Ratio = Old Ratio - New Ratio
E's = `3/4 - 1/3 = 5/12`

F's = `1/4 - 1/3 = -1/12`

WN2
Calculation of F’s share of gain in goodwill
G’s share of Goodwill = 50,000 + 70,000 = Rs 1, 20,000
Goodwill of the firm on the basis of G’s share = 1,20,000 x `3/1` = Rs. 3,60,000

F’s share of gain in goodwill = 3,60,000 x `1/12` = Rs. 30,000.