T.S. Grewal Class 12 Chapter 4 Q.36 - Admission of a Partner

Question 36

A, B and C are in partnership sharing profits and losses in the ratio of 5 : 4 : 1. Two new partners D and E are admitted. The profits are now to be shared in the ratio of 3 : 4 : 2 : 2 : 1 respectively. D is to pay ₹90,000 for his share of goodwill, but E has insufficient cash to pay for goodwill. Both new partners introduce ₹1,20,000 each as capital. Pass the necessary Journal entries.

Solution

D’s goodwill ₹90,000 for a 2/12 share → firm’s goodwill = ₹90,000 × 12/2 = ₹5,40,000. Sacrifice/(Gain): A 15/60 (Sac), B 4/60 (Sac), C 4/60 (Gain), E’s share 1/12 = 5/60. Goodwill shares: A ₹1,35,000; B ₹36,000 (sacrificers); C ₹36,000 and E ₹45,000 (contributors).

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		3,30,000
	To D’s Capital A/c			1,20,000
	To E’s Capital A/c			1,20,000
	To Premium for Goodwill A/c			90,000
	(Capital brought by D and E, and premium by D)
	Premium for Goodwill A/c    Dr.		90,000
	E’s Capital A/c    Dr.		45,000
	C’s Capital A/c    Dr. (gain)		36,000
	To A’s Capital A/c			1,35,000
	To B’s Capital A/c			36,000
	(Goodwill adjusted: sacrificers A and B credited; E and the gaining partner C debited)