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Standard XII

Accountancy

Reassessment of Liabilities

B and C are i...

Question

B and C are in partnership sharing profits and losses as 3 : 1. They admit D into the firm, D pays premium of ₹ 15,000 for 1/3rd share of the profits. As between themselves, B and C agree to share future profits and losses equally. Draft Journal entries showing appropriations of the premium money.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Cash A/c

Dr.

15,000

To Premium for Goodwill A/c

15,000

(D brought his share of goodwill in cash)

Premium for Goodwill A/c

Dr.

15,000

To B’s Capital A/c

15,000

(Premium for goodwill transferred to B’s Capital)

C’s Capital A/c

Dr.

3,750

To B’s Capital A/c

3,750

(Goodwill charged from C’s Capital Account due
to his gain in profit sharing)

WN1
Calculation of Sacrificing Ratio:

Let combined share of all partners after D’s admission be = 1

B and C each share of profit after D’s admission will be

WN2

C is gaining in new the firm. Hence, C’s gain in goodwill will be debited to his capital and given to B (sacrificing partner).

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Similar questions

B

and

C

are in partnership sharing profits and losses as

3 : 1

. They admit

D

into the firm,

D

paying a premium of

R s . 15, 000

for

1 / 3^{r d}

share of the profits. As between themselves,

B

and

C

agree to share the future profits and losses equally. Draft Journal entries showing appropriation of the premium money.

Q. A and B are partners sharing profits and losses in the ratio of

3 : 2

. They admit C into the partnership for one-fourth share of the profits while A and B as between themselves are sharing profits & losses equally. The new profit sharing ratio will be _______.

A and B are partners sharing profits and losses in the ratio of 3:2. They admit C into the partnership for one-fourth share of the profits while A and B as between themselves sharing profits and losses equally. The new profit sharing ratio (NR) between A, B and C will be:

A and B are partners in a firm sharing profits and losses in the ratio of 3: 2. They decide to admit C into partnership with $\frac{1}{4}$ share in profits. C will bring in Rs.30,000 for capital and the requisite amount of goodwill premium in cash. The goodwill of the firm is valued at Rs. 20,000. The new profit sharing ratio is 2 : 1: 1. A and B withdraw their share of goodwill. Given necessary journal entries.

Q. Give Journal entries to record the following arrangements in the books of the firm:
(a)

B

and

C

are partners sharing profits in the ratio of

3 : 2

D

is admitted paying a premium (goodwill) of

R s . 2, 000

for

1 / 4^{t h}

share of the profits, shares of

B

and

C

remain as before.
(b)

B

and

C

are partners sharing profits in the ratio of

3 : 2

D

is admitted paying a premium of

R s . 2, 100

for

1 / 4^{t h}

share of profits which he acquires

1 / 6^{t h}

from

B

and

1 / 12^{t h}

from

C

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Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Cash A/c	Dr.		15,000
	To Premium for Goodwill A/c				15,000
	(D brought his share of goodwill in cash)

	Premium for Goodwill A/c	Dr.		15,000
	To B’s Capital A/c				15,000
	(Premium for goodwill transferred to B’s Capital)

	C’s Capital A/c	Dr.		3,750
	To B’s Capital A/c				3,750
	(Goodwill charged from C’s Capital Account due to his gain in profit sharing)