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Standard XII

Accountancy

Change in Profit Sharing Ratio(PSR)

a and b are p...

Question

a and b are partners sharing in the ratio 5;3. They admit D for 1/6th share . D is to bring 25000 as his capital and 30000 as his share of goodwill in cash. Goodwill appears in the books of accounts as 24000. Pass necessary Journal Entries

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Solution

The journal entries when a new partner brings capital and his share of goodwill on admission are as follows:
Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)

A’s Capital A/c
Dr

15,000

B’s Capital A/c
Dr

9,000

To Goodwill A/c

24,000

(old goodwill written off between old partners in their old ratio)

Cash A/c
Dr

55,000

To D’s Capital A/c

25,000

To Premium for goodwill A/c

30,000

(new partner D brings his share for goodwill and capital)

Premium for goodwill A/c
Dr

30,000

To A’s Capital A/c

18,750

To B’s Capital A/c

11,250

(premium for goodwill distributed in old partners in their sacrifice ratio 5:3

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Similar questions

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

	A’s Capital A/c	Dr		15,000
	B’s Capital A/c	Dr		9,000
	To Goodwill A/c				24,000
	(old goodwill written off between old partners in their old ratio)

	Cash A/c	Dr		55,000
	To D’s Capital A/c				25,000
	To Premium for goodwill A/c				30,000
	(new partner D brings his share for goodwill and capital)

	Premium for goodwill A/c	Dr		30,000
	To A’s Capital A/c				18,750
	To B’s Capital A/c				11,250
	(premium for goodwill distributed in old partners in their sacrifice ratio 5:3