# Pass Necessary Journal Entries for C'S Admission and Apportion the Profit Between the Partners. - Accountancy

Journal Entry

A and B are partners sharing profits and losses in the ratio of 7 : 5. They admit C, their Manager, into partnership who is to get 1/6th share in the business. C brings in ₹ 10,000 for his capital and ₹ 3,600 for the 1/6th share of goodwill which he acquires 1/24th from A and 1/8th from B. Profits for the first year of the new partnership was ₹ 24,000. Pass necessary Journal entries for C's admission and apportion the profit between the partners.

#### Solution

 Journal Date Particulars L.F. Debit Amount Rs Credit Amount Rs Cash A/c Dr. 13,600 To C’s Capital A/c 10,000 To Premium for Goodwill A/c 3,600 (C brought capital and his share of goodwill) Premium for Goodwill A/c Dr. 3,600 To A’s Capital A/c 900 To B’s Capital A/c 2,700 (C’s share of goodwill transferred to A and B in their sacrificing ratio i.e. 3:1) Profit and Loss Appropriation A/c Dr. 24,000 To A’s Capital A/c 13,000 To B’s Capital A/c 7,000 To C’s Capital A/c 4,000 (Profit after C’s admission distributed)

Working Note:
WN 1 :
Sacrificing Ratio = A : B
= 1/24 : 1/8 = 1 : 3
WN 2 : Distribution of C’s share of Goodwill (in sacrificing ratio)
A will be get = 3,600 x 1/4 = Rs. 900

B will be get = 3,600 x 3/4 = Rs. 2,700

WN3 : Calculation of New Profit Sharing Ratio
New Ratio = Old Ratio - Sacrificing Ratio

A's = 7/12 - 1/24 = 13/24

B's = 5/12 - 1/8 = 7/24

New Profit Sharing Ratio = A : B : C
= 13/24 : 7/24 : 1/6
= 13 : 7 : 4

WN4 : Distribution of Profit earned after C’s admission (in new ratio)
A will get = 24,000 x 13/24 = Rs. 13,000

B will get = 24,000 x 7/24 = Rs. 7,000

C will get = 24,000 x 4/24 = Rs. 4,000.

Concept: Admission of a New Partner
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 26 | Page 88