1.

A, B and C are partners sharing profits and losses in the ratio of 3: 2 : 1. D is admitted. The new profit sharing ratio between A, B, C and D will be 3 : 3 : 2 : 2. Goodwill of the firm is valued at ` 3,00,000. Goodwill already appears in the books at ` 6,000. D brings his share of firm’s goodwill in cash. The amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is credited to them. Give the journal entries relating to adjustment of goodwill​

Answer»

A's old share= 2/5B's old share= 2/5C's old share= 1/5D is admitted for 1/6th share. C will RETAIN his ORIGINAL share. Hence, remaining share= 1- [1/6] - [1/5]                                        = 19/30This remaining share will be shared by A and B in their old RATIO, i.e, 2:2A's new share= 2/4 * 19/30                       = 38/120B's new share= 2/4 * 19/30                        = 38/120New Profit SHARING ratio= 38:38:24:20                                       = 19:19:12:10Sacrificing ratio= old ratio- new ratioA's sacrifice= 2/5- 19/60                   = 5/60B's sacrifice= 2/5- 19/60                    = 5/60Sacrificing ratio= 5:5= 1:1[Note: since nothing is mentioned, we assume that only A and B have sacrificed since C retains his old share]



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