Q.20. Arti and Bharti are partners in a firm sharing profits in 3:2 ratio, They admitted Sarthi for 1/4 share in the profits of the firm.

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Q.20. Arti and Bharti are partners in a firm sharing profits in 3:2 ratio, They admitted Sarthi for 1/4 share in the profits of the firm. Sarthi brings Rs. 50,000 for his capital and Rs. 10,000 for his 1/4 share of goodwill. Goodwill already appears in the books of Arti and Bharti at Rs. 5,000. the new profit sharing ratio between Arti, Bharti and Sarthi will be 2:1:1. Record the necessary journal entries in the books of the new firm?

SOLUTION


Journal Entries

DateParticularsL.FAmount(Dr.)Amount(Cr.)
Arti’s capital A/cDr.3,000
Bharati’s capitalDr.2,000
  To Cash A/c5,000
(Goodwill Written off)
Cash A/cDr.60,000
  To Sarthi’s capital A/c50,000
  To Premium for Goodwill A/c10,000
(Sarthi brought his share of Goodwill and Premium for Goodwill A/c)
Premium for Goodwill A/cDr.10,000
  To Arthi’s capital A/c4,000
  To sarthi’s capital A/c6,000
(premium for good will cfedited to old partners sacrifice ratio)

Partners old ratio = Arti:Bhrati

=3:2

Partners new share = Arti:Bhrati:Sarthi

=2:1:1

Sacrificing ratio=old ratio-new ratio

Arti=3/5-2/4

=2/20

Bhrati=2/5-1/4

=3/20

Therefor,Arti:Bhrati=2:3

Arti will received=10,000 X 2/5 = 4,000

Bharti will received=10,000 X 3/5=6,000

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