Page No 5.87:
Question 16:
P
and Q
are partners sharing profits in the ratio of 3 : 2.
They admit R into partnership who acquires 1/5th of his share from P
and 4/25th share from Q. Calculate New Profitsharing Ratio and
Sacrificing Ratio.
Answer:
Calulation of New Profit Sharing Ratio
P:Q=3:2 (Old Ratio)
R acquires 1/5th of his share from P
And,
Remaining 4/5th
(1−1/5) of his share from Q.
If 4/5th share of R=4/25
R's share=4/25×54=5/25
P's sacrifice=1/5×1/5=1/25
Q's sacrifice=4/25
P's new share=3/5−1/25=1/5−1/25=14/25
Q's new share=2/5−4/25=10−4/25=6/25
R's new share=1/5×5/5=5/25
P:Q:R=14:6:5
Sacrificing Ratio=1:4
Page No 5.87:
Question 17:
Answer;
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








Cash A/c 
Dr. 

14,000 


To Premium for Goodwill A/c 



14,000 

(c brought Premium for Goodwill) 











Premium for Goodwill A/c 
Dr. 

14,000 


To A’s Capital A/c 



4,000 

To B’s Capital A/c 



10,000 

(Premium for Goodwill distributed between B and C in sacrificing ratio i.e. 3:2) 










Working notes;
Old ratio of A
and B =2:5
C is admitted
of ¼ share in the firm
Remaining share
of A and B after C’s admission =11/4=3/4
A’s share
=3/4×2/7==6/28
B’s share
=3/4×5/7==15/28
C’s share
=1/4×7/7==7/28
New profit
sharing ratio of A, B and C=6:15:7
Sacrificing
ratio= Old – new
A=2/7 6/28=86/28=2/28
B=5/715/28=2015/28=5/28
Sacrificing
ratio of A:B=2:5
Page No 5.87:
Question 18:
A and B are
partners sharing profits and losses in the ratio of 2 :
5. They admit C on the condition that he will bring ` 14,000 as his share of goodwill to be distributed between
A and B. C's share in the future profits or losses will
be 1/4th. What will be the new profitsharing ratio and what amount of goodwill
brought in by C will be received by A and B?
Answer:

A 
B 
OLD RATION 
2 : 
5 
C is admitted for 1/4share
Let the combined share of A, B and C
be = 1
Combined share of A and B after C’s
admission = 1 − C’s share
=11/4
=3/4
New Ratio = Old Ratio
Combined share of A and B
A’s 
=2/7×3/4 

=6/28 
B’s 
=5/7×3/4 

=15/28 
New profit sharing ratio=
A 

B 

C 
6/28 
: 
15/28 
: 
1/4 
6/28 
: 
15/28 
: 
7/28 
6 
: 
15 
: 
7 
Distribution of C’s share of
Goodwill
C’s share of Goodwill = ` 14,000
A will get =14,000×2/7=4,000
B will get =14,000×5/7=10,000
Page No 5.87:
Question 19:
Give Journal entries to record the following arrangements in the books of
the firm:
(a) B and C are partners sharing profits in the ratio of 3 :
2. D is admitted paying a premium (goodwill) of ` 2,000 for 1/4th share of the profits,
shares shares of B and C remain as
before.
(b) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of ` 2,100 for 1/4th share of profits
which he acquires 1/6th from B and 1/12th from C.
Answer:
(a)
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








Cash A/c 
Dr. 

2,000 


To Premium for Goodwill A/c 



2,000 

(D brought Premium for Goodwill) 











Premium for Goodwill A/c 
Dr. 

2,000 


To B’s Capital A/c 



1,200 

To C’s Capital A/c 



800 

(Premium for Goodwill distributed between B and C in sacrificing ratio i.e. 3:2) 










Working Note:
Distribution of premium for Goodwill
B will get =2,000×3/5=1,200
A will get =2,000×2/5=800
(b)
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 


Cash A/c 
Dr. 

2,100 


To Premium for Goodwill A/c 



2,100 

(D brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

2,100 


To B’s Capital A/c 



1,400 

To C’s Capital A/c 



700 

(Premium for Goodwill brought distributed between B and C in sacrificing Ratio i.e. 2:1) 










Working Note:
WN1

B 

C 
Sacrificing ratio = 
1/6 
: 
1/12 

2 
: 
1 
WN2
Distribution of Premium for Goodwill
B will get =21,00×2/3=1.400
C will get =21,00×1/3=700
Page No 5.87:
Question 20:
B
and C
are in partnership sharing profits and losses as 3 :
1. They admit D into the firm, D pays premium of ` 15,000 for 1/3rd share of the profits. As between
themselves, B and C agree to share future profits and losses
equally. Draft Journal entries showing appropriations of the premium money.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 








Cash A/c 
Dr. 

15,000 


To Premium for Goodwill A/c 



15,000 

(D brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

15,000 


To B’s Capital A/c 



15,000 

(Premium for goodwill transferred to B’s Capital) 











C’s Capital A/c 
Dr. 

3,750 


To B’s Capital A/c 



3,750 

(Goodwill charged from C’s
Capital Account due 










WN1
Calculation of Sacrificing Ratio:
Let combined share of all partners after D’s admission be = 1
Combined share of B and C after C’s admission be = 1
=11/3
=2/3
B and C each share of profit after D’s admission will be
=2/3×1/2 
=2/6 =1/3
each 
Sacrificing
Ratio =Old ratio new ratio
A’s 
=3/41/3 

=5/12 (Sacrifice) 
B’s 
=1/41/3 

=1/12(gain) 
WN2
C is gaining in new the firm. Hence,
C’s gain in goodwill will be debited to his capital and given to B (sacrificing
partner).
Goodwill of the firm= premium of Goodwill brough by D × reciprocal of D’s share
=15,000×3/1=45,000
C’s share of gain in goodwill=
goodwill of the×firm share of gain
=45,000×1/12=3,750