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| 1. |
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 in ₹ 30,000 as capital and ₹ 10,000 as goodwill. At the time of admission of C, goodwill appears in the Balance Sheet of A and B at ₹ 3,000. The new profit-sharing ratio of the partners will be 5 : 3 : 2. Pass necessary journal entries. |
| Answer» PROFIT sharing refers to various INCENTIVE plans introduced by BUSINESSES that provide direct or indirect payments to employees that depend on COMPANY's profitability in addition to employees' regular salary and bonuses. In publicly traded companies these plans typically amount to allocation of shares to employees. | |