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Question
Amar and Samar were partners in a firm sharing profits and losses in 3:1 ratio. They admitted Kanwar for 1/4 share of profits. Kanwar could not bring his share of goodwill premium in cash. The Goodwill of the firm was valued at Rs. 80,000 on Kanwar’s admission. Record necessary journal entry for goodwill on Kanwar’s admission.
Solution
Old Ratio = Amar : Samar
= 3 : 1
Kanwar admitted for 1/4 share of profit
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Journal Entries |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Kanwar's Capital A/c |
Dr. |
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20,000 |
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To Amar's Capital A/c |
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15,000 |
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To Samar's Capital A/c |
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5,000 |
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(Kanwar's share of goodwill charged from his capital account by Amar and Kanwar in sacrificing ratio) |
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New Firm’s Goodwill = Rs 80,000
Kanwar’s Share of Goodwill = 80,000 × (1/4) = 20,000
Kanwar’s Goodwill will be taken by Amar and Samar in their sacrificing ratio here. Sacrificing Ratio will be equal to old ratio because new and sacrificing ratio is not given, if sacrificing and new ratio is not given it is assumed that old partners sacrificed in their old ratio.
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RELATED QUESTIONS
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Balance Sheet of A and B as on March 31, 2016 |
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