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A and B are p...

Question

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.

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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)

C’s share = A’s sacrifice + B’s sacrifice

New Ratio is 12:6:7

C’s will bring Premium for Goodwill

Distribution of Premium for Goodwill-

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