Question

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings ₹ 30,000 as capital and ₹ 10,000 as goodwill. At the time of admission of C, goodwill appeared in the Balance Sheet of A and B at ₹ 3,000. New profit-sharing ratio of the partners will be 5 : 3 : 2. Pass necessary Journal entries.

Answer 1

Journal Entries
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	A’s Capital A/c	Dr.		1,800
	B’s Capital A/c	Dr.		1,200
	To Goodwill A/c				3,000
	(Goodwill written-off)
	Cash A/c	Dr.		40,000
	To C’s Capital A/c	Dr.			30,000
	To Premium for Goodwill A/c				10,000
	(C brought capital and his share of goodwill in cash)
	Premium for Goodwill	Dr.		10,000
	To A’s Capital A/c				5,000
	To B’s Capital A/c				5,000
	(Premium for Goodwill distributed)

Sacrificing Ratio = Old Ratio − New Ratio

Distribution of Premium for Goodwill C’s share of Goodwill)

Goodwill written-off