Question

Hari, Ravi and Kavi were partners in afirm sharing profits and losses in the ratio of 3:2:1. They admitted Guru as a new partner for 1/7th share in the profits. The new profit sharing ratio will be 2:2:2:1, respectively. Guru brought Rs. 3,00,000 for his capital and Rs. 45,000 for his share of goodwill. Pass necessary Journal entries in the books of the firm.

Answer 1

$\begin{array}{cccccc}\text{Date}& \text{Paticulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 3,45,000& \\ & \text{To Guru's Capital A/c}& & & & 3,00,000\\ & \text{To Premium for Goodwill A/c}& & & & 45,000\\ & \underset{–}{\text{Being capital and goodwill brought in by Guru}}& & & & \\ & \text{Premium for Goodwill A/c}& \text{Dr.}& & 45,000& \\ & \text{Kavi's Capital A/c}& \text{Dr.}& & 37,500& \\ & \text{To Hari's Capital A/c}& & & & 67,500\\ & \text{To Ravi's Capital A/c}& & & & 15,000\\ & \text{(Being goodwill distributed among sacrificing partners)}& & & & \end{array}$

Calculation of Sacrificing Ratio = Old Ratio - New Ratio

Hari's Sacrificing =$\frac{3}{6}-\frac{2}{7}=\frac{(21-12)}{42}=\frac{9}{42}$ $\text{(Sacrifice)}$

Ravi's Sacrificing =$\frac{2}{6}-\frac{2}{7}=\frac{(14-12)}{42}=\frac{2}{42}$ $\text{(Sacrifice)}$

Kavi's Sacrificing =$\frac{1}{6}-\frac{2}{7}=\frac{(7-12)}{42}=\frac{5}{42}$ $\text{(Gain)}$

Since Kavi is also gaining at the time of admission of Guru, so he will also bring his share of goodwill. For his share, his capital A/c will be debited. His share of goodwill will be calculated in firm's goodwill.

Kavi's share of goodwill $=45,000\times \frac{7}{1}\times \frac{5}{42}=Rs.37,500$