Page No 5.88:
Question 26:
A and B are partners
in a firm sharing profits and losses in the ratio of 3 :
2. They admit C into partnership for 1/5th share. C brings ` 30,000 as capital and
` 10,000 as goodwill. At the
time of admission of C, goodwill appeared in the Balance Sheet of A
and B at ` 3,000. New profitsharing ratio of the partners will be 5 : 3 : 2. Pass necessary Journal entries.
Answer:
Journal Entries 

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


A’s Capital A/c 
Dr. 

1,800 


B’s Capital A/c 
Dr. 

1,200 


To Goodwill A/c 



3,000 

(Goodwill writtenoff) 











Cash A/c 
Dr. 

40,000 


To C’s Capital A/c 
Dr. 


30,000 

To Premium for Goodwill A/c 



10,000 

(C brought capital and his share of goodwill in cash) 











Premium for Goodwill 
Dr. 

10,000 


To A’s Capital A/c 



5,000 

To B’s Capital A/c 



5,000 

(Premium for Goodwill distributed) 











A 
B 
C 
OLD RATION 
3 : 
2 : 
1 
NEW RATIO 
5 : 
3 : 
2 : 
Sacrificing Ratio = Old Ratio − New Ratio

A’s 
=3/55/10 




=1/10 



B’s 
=2/53/10 




=1/10 



X 

Y 

Sacrificing Ratio = 
1/10 
: 
1/10 

= 
1 
: 
1 

Distribution of Premium for Goodwill C’s share of Goodwill)
A and B each will get =10,000×1/2=5,000
Goodwill writtenoff
A’s capital will be debited =3,000×3/5=1,800
B’s
capital will be crebited =3,000×2/5=1,200
Page No 5.88:
Question 27:
Anu and Bhagwan were
partners in a firm sharing profits in the ratio of 3 :
1. Goodwill appeared in the books at
` 4,40,000.
Raja was admitted to the partnership. The new profitsharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1.
Raja brought `
1,00,000 for his capital and necessary cash for his
goodwill premium. Goodwill of the firm was valued at ` 2,50,000.
Record necessary Journal entries in the books of the firm for
the above transactions.
Answer:
Journal 

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


Anu’s Capital A/c 
Dr. 

3,30,000 


Bhagwan’s Capital A/c 
Dr. 

1,10,000 


To
Goodwill A/c 



4,40,000 

(Old goodwill
written off in old ratio) 











Cash A/c 
Dr. 

1,50,000 


To Raja’s
Capital A/c 



1,00,000 

To
Premium for Goodwill A/c 



50,000 

(Capital and
goodwill brought in by Raju) 











Premium for
Goodwill A/c 
Dr. 

50,000 


Bhagwan’s Capital A/c 320×2,50,000 
Dr. 

37,500 


To Anu’s Capital A/c 720×2,50,000 



87,500 

(Premium for
goodwill adjusted) 




Working Notes:
WN1 Calculation of Share in Old
Goodwill
Anu's share=4,40,000×34=3,30,000
Bhagwan's share=4,40,000×14=1,10,000
WN2 Calculation of Raja's Share of
Goodwill
Raja's Share of Goodwill=Firm's Goodwill×Raja's Profit Share
=2,50,000×15=50,000
WN3 Calculation of Sacrificing Ratio
Sacrificing Ratio=Old ShareNew Share
Anu's=3425=720(sacrifice)
Bhagwan's=1425=320(gain)
Page No 5.88:
Question 28:
X and Y are partners
in a firm sharing profits in the ratio of 3 : 2. On
1st April, 2019, they admit Z as a partner for 1/4th share in the
profits. Z contributed following assets towards his capital and for
his share of goodwill:
Stock ` 60,000; Debtors
` 80,000; Land ` 1,00,000, Plant and Machinery ` 40,000.
On the date of admission of Z, the goodwill of the firm was valued
at ` 6,00,000.
Pass necessary Journal entries in the books of the firm on Z's
admission.
Answer:
Journal 

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

2019 





April 1 






Debtors A/c 
Dr. 

80,000 


Land A/c 
Dr. 

1,00,000 


Plant and Machinery A/c 
Dr. 

40,000 


To Z’s Capital A/c 


1,30,000 


To Premium for Goodwill A/c 


1,50,000 


(Z brought assets for his share of goodwill and Capital) 










April 1 






To X’s Capital A/c 


90,000 


To Y’s Capital A/c 


60,000 


(Z’s share of Goodwill distributed between X and Y in sacrificing ratio) 









Working Notes:
WN1
Z’s share of goodwill=6,00,000×1/4=1,50,000
WN2
Distribution of Z’s Goodwill
X will get =1,50,000×3/5=90,000
Y will get =1,50,000×2/5=60,000
Page No 5.88:
Question 29:
A and B are partners in a
business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st
April, 2019, their capitals were ` 8,000 and ` 10,000 respectively. On that date, they admit C in
partnership and give him 1/4th share in the future profits. C
brings ` 8,000 as his capital and ` 6,000 as goodwill. The amount of goodwill is withdrawn by
the old partners in cash. Draft the journal entries and show the Capital
Accounts of all the Partners. Calculate proportion in which partners would
share profits and losses in future.
Answer:
Journal 

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

2019 





April 1 






To C’s Capital A/c 


8,000 


To Premium for Goodwill A/c 


6,000 


(C brought capital and his share of goodwill) 










April 1 






To A’s Capital A/c 


2,000 


To B’s Capital A/c 


4,000 


(C’s share of goodwill
distributed between 











A’s Capital A/c 
Dr. 

2,000 


B’s Capital A/c 
Dr. 

4,000 


To Cash A/c 


6,000 


(Amount of goodwill withdrawn by A and B) 









Partners’ Capital Accounts 

Dr. 






Cr. 
Particulars 
A 
B 
C 
Particulars 
A 
B 
C 
Cash 
2,000 
4,000 

Balance b/d 
8,000 
10,000 





Cash 


8,000 




Premium for Goodwill 
2,000 
4,000 

Balance c/d 
8,000 
10,000 
8,000 





10,000 
14,000 
8,000 

10,000 
14,000 
8,000 








Calculation of New (Future) Ratio

A 
B 
OLD RATION 
1 : 
2 : 
C is admitted for ¼ share of profit
Let combined share of all partners after C’s admission 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 in the new firm
A’s 
=1/3×3/4 

=3/12 
B’s 
=2/3×3/4 

=6/12 

A 

B 

C 
New profit sharing ratio= 
3/12 
: 
6/12 
: 
1/4 
= 
3/12 
: 
6/12 
: 
3/12 
= 
1 
: 
2 
: 
1 
Distribution of Premium for Goodwill
A will get =6,000×1/3=2,000
B will get =6,000×2/3=4,000
Page No 5.88:
Question 30:
A
and B
were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted C as a new partner for 3/7th
share in the profit and the new profitsharing ratio will be 2
: 2 : 3. C brought
` 2,00,000
as his capital and ` 1,50,000 as premium for goodwill. Half of their share of
premium was withdrawn by A and B from the firm. Calculate
sacrificing ratio and pass necessary Journal entries for the above transactions
in the books of the firm.
Answer:
Journal 

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








Cash A/c 
Dr. 

3,50,000 


To C’s Capital A/c 


2,00,000 


To Premium for Goodwill A/c 


1,50,000 


(C brought capital and Premium for Goodwill) 











Premium for Goodwill A/c 
Dr. 

1,50,000 


To A’s Capital A/c 


1,10,000 


To B’s Capital A/c 


40,000 


(Premium for Goodwill distributed) 











A’s Capital A/c 
Dr. 

55,000 


B’s Capital A/c 
Dr. 

20,000 


To Cash A/c 


75,000 


(Half of the goodwill withdrawn by A and B) 









Calculation of Sacrificing Ratio
Sacrificing
Ratio =Old ratio new ratio

A’s 
=3/52/7 




=11/35 



B’s 
=2/52/7 




=4/35 



X 

Y 

Sacrificing Ratio = 
11/35 
: 
4/35 

= 
11 
: 
4 

Working Notes
WN1
Distribution of Premium for Goodwill
A will get =1,50,000×11/35=1,10,000
B will get 1,50,000×4/35=40,000
WN2
Amount of Premium for Goodwill withdrawn
A will get =1,10,000×1/2=55,000
B will get =40,000×1/2=20,000