Rajesh and Mukesh are equal partners in a firm. They admit Hari into partnership and the new profit sharing ratio between Rajesh, Mukesh and Hari is 4:3:2.

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Q.25. Rajesh and Mukesh are equal partners in a firm. They admit Hari into partnership and the new profit sharing ratio between Rajesh, Mukesh and Hari is 4:3:2. On Han’s admission goodwill of the firm is valued at Rs. 36,000. Han is unable to bring his share goodwill premium in cash. Rajesh, Mukesh and Han decided not to show goodwill in their balance sheet. Record necessary journal entries for the treatment of goodwill on Han’s admission.

SOLUTION

Books of Rajesh, Mukesh and Hari

Journal 

DateParticularsL.FAmount
(Dr.)		Amount
(Cr.)
Hari’s capital A/cDr.8,000
   To Rajesh’s capital A/c2,000
   To Mukesh capital A/c8,000
(Hari’s share of Goodwill is taken from his capital by old partner Hari and Mukesh in their sacrificing ratio)

Calculation of Hari's share of Goodwill:

Firm's Goodwill = Rs 36,000

Hari's share of Goodwill

        = 36,000 X 2/9

        =Rs 8,000

Calculation of Sacrificing ratio between old partners:

Sacrificing ratio = old ratio-new ratio

              Rajesh  = 1/2 - 4/9

                           =1/18

             Mukesh = 1/2 - 3/9

                           =3/18

Sacrificing ratio between Rajesh and Mukesh is 1:3



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