X and Y are partners sharing profits in the ratio of 5:4. They admit Z – InterviewSolution

1.

X and Y are partners sharing profits in the ratio of 5:4. They admit Z in the firm for 1/3rd profit, which he takes 2/9th from X and 1/9th from Y and brings Rs. 1500 as premium. Pass the necessary Journal entries on Z’s admission.

Answer»

Cash A/C Dr.	1500
To premium A/C		1500
(cash brought in by Z for his share of goodwill)
Premium A/C Dr	1500
To X’s capital A/C	1000
To Y’s Capital A/C		500
(Goodwill distributed among sacrificing partners in the ratio of 2:1.)

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