T.S. Grewal Class 12 Chapter 4 Q.28 - Admission of a Partner

Question 28

X and Y are partners sharing profits in the ratio of 5 : 3. Z is admitted for a 3/10th share of profit, half of which was gifted by X and the remaining share was taken by Z equally from X and Y. The goodwill of the firm is valued at ₹54,000. Z brings in his requisite share of the firm’s goodwill. The profit for the first year of the new partnership amounts to ₹60,000. Pass the necessary Journal entries to adjust goodwill and distribute profits.

Solution

Of Z’s 3/10 share, half (3/20) is gifted by X (no premium is brought for the gifted part), and the other 3/20 is taken equally from X and Y. So Z brings premium only for 3/20 = ₹54,000 × 3/20 = ₹8,100, shared by X and Y in 1 : 1. New ratio = 4 : 3 : 3.

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		8,100
	To Premium for Goodwill A/c			8,100
	Premium for Goodwill A/c    Dr.		8,100
	To X’s Capital A/c			4,050
	To Y’s Capital A/c			4,050
	(Premium for the 3/20 share distributed to X and Y equally; the 3/20 gifted by X carries no premium)
	Profit & Loss A/c    Dr.		60,000
	To X’s Capital A/c			24,000
	To Y’s Capital A/c			18,000
	To Z’s Capital A/c			18,000
	(Profit distributed in the new ratio 4 : 3 : 3)