New partner gets two rights in the firm, right in assets and share in future profits. For right in assets he brings capital and for share in future profits he brings goodwill premium.

True

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False

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Solution

The correct option is A True
New partner gets two rights in the firm, right in assets and share in future profits. For right in assets he brings capital and for share in future profits he brings goodwill premium.

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Similar questions

Q. Balance Sheet of

J

and

K

who share profits in the ratio of

3 : 2

is as follows:

Liabilities	(Rs.)	Assets	(Rs.)
Reserves J's Capital 1,50,000 K's Capital 1,00,000	1,00,000 2,50,000	Cash Other Assets	2,00,000 1,50,000
	3,50,000		3,50,000

M

joins the firm from

1^{s t}

April, 2018 for a half share in the future profits. He is to pay

R s . 1, 00, 000

for goodwill and

R s . 3, 00, 000

for capital. Draft the Journal entries and prepare Balance Sheet in each of the following cases:
(a) If

M

acquires his share of profit from the firm in the profit-sharing ratios of the partners.
(b) If

M

acquires his share of profits from the firm in equal proportion from the original partners.
(c) If

M

acquires his share of profit in the ratio

3 : 1

from the original partners, ascertain the future profit-sharing ratio of the partners in each case.

George and Henry are partners sharing profits in the ratio of 3 : 2. They decided to admit David as a new partner and to share future profits and losses equally.

David brings in Rs 50,000 as his capital. Goodwill of the firm is valued at Rs 60,000. Record the necessary journal entries :

(a) When no goodwill appears in the books

(b) When goodwill appears at Rs 50,000, and

A

and

B

, carrying on business in partnership and sharing profits and losses in the ratio of

3 : 2

, require a partner, when their Balance Sheet stood as:

Liabilities	(Rs.)	Assets	(Rs.)
Creditors A's Capital 51,450 B's Capital 36,750	11,800 88,200	Cash Stock Debtors Furniture Machinery	1,500 28,000 19,500 2,500 48,500
	1,00,000		1,00,000