Question

Aditya and Balan are partners sharing profits and losses in 3: 2 ratio. They admitted Christopher for $\frac{1}{4}$ share in profits. The new profit sharing ratio agreed was 2 : 1: 1. Christopher brought Rs.50,000 for his capi tal. His share of goodwill was agreed to at Rs. 15,000. Christopher could bring only Rs.10,000 out of his share of goodwill. Record necessary journal entries in the books of the firm

Answer 1

$\text{Journal Entries}$\
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Amt.(Cr)}& \text{Amt.(Cr)}\\ \left(i\right)& \text{Cash A/c}& Dr& & 60,000& \\ & \text{To Christopher's Capital A/c}& & & & \text{60,000}\\ & \text{(Cash Rs.50,000 capital and Rs. 10,000 as premium paid by Christopher)}& & & & \\ & \underset{–}{}& & & & \\ \left(ii\right)& \text{Christopher's Capital A/c}& Dr& & 15,000& \\ & \text{To Aditya's Capital A/c}& & & & \text{6,000}\\ & \text{To Balan's Capital A/c}& & & & \text{9,000}\\ & \text{(Premium Rs. 10,000 and remaining Rs.5,000 unpaid adjusted from new partner's capital and distributed in sacrificing ratio)}& & & & \end{array}$

Note : In case new partner does not give his full share of goodwill in cash the balance will be adjusted from his capital account.