Question

Arti and Bharti are partners in a firm sharing profits in 3 : 2 ratio. They admitted Sarthi as a new partner and the new profit-sharing ratio will be 2 : 1 : 1. Sarthi brought Rs 1,00,000 for her share of goodwill. Goodwill already appeared in the books of Arti and Bharti at Rs 60,000.

Pass the necessary Journal entries in the books of the new firm for the above transactions.

Answer 1

JOURNAL ENTRIES

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F}& \text{Dr.(Rs)}& \text{Cr.(Rs)}\\ & \text{Arti's Capital A/c}Dr.& & 36,000& \\ & \text{Bharti's Capital A/c}Dr.& & 24,000& \\ & \text{To Goodwill A/c}& & & 60,000\\ & \text{(Goodwill already appearing in the books, now}& & & \\ & \text{written of in old ratio)}& & & \\ & \underset{–}{}& & & \\ & \text{Bank A/c}Dr.& & 1,00,000& \\ & \text{To Sarthi's Capital A/c}& & & 1,00,000\\ & \text{(The amount of goodwill/premium brought in cash by}& & & \\ & \text{Sarthi)}& & & \\ & \underset{–}{}& & & \\ & \text{Sarthi's Capital A/c}Dr.& & 1,00,000& \\ & \text{To Arti's Capital A/c}& & & 40,000\\ & \text{To Bharti's Capital A/c}& & & 60,000\\ & \text{(The amount of goodwill/premium transferred to old}& & & \\ & \text{partner's in sacrificing ratio)}& & & \end{array}$

Working Note:

Calculation of Sacrificing Ratio:

Old Ratio - New Ratio

$\text{Arti}=\frac{3}{5}-\frac{2}{4}=\frac{12-10}{20}=\frac{2}{20}$

$\text{Bharti}=\frac{2}{5}-\frac{1}{4}=\frac{8-5}{20}=\frac{3}{20}$

Hence, Sacrificing Ratio of Arti and Bhari = 2 : 3