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A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions?
Most Upvoted Answer
A and b are partners in a firm sharing profit and losses in the ratio ...
Journal Entry for Admission of a New Partner and Goodwill Valuation
Introduction:
In this transaction, a new partner is being admitted into the partnership firm. For this admission, the existing partners, A and B, are surrendering a part of their share of goodwill. Let's understand the journal entry for this transaction.
Step 1: Determine the Existing Profit Sharing Ratio
The profit sharing ratio between A and B is 3:2.
Step 2: Admission of New Partner
A new partner, C, is being admitted to the partnership firm.
Step 3: Surrender of Share of Goodwill
A surrenders 1/5th of his share, whereas B surrenders 2/5th of his share of goodwill.
Step 4: Valuation of Goodwill
The goodwill of the firm is valued at 75000, and ac brings in his share of goodwill, which is retained in the firm's book.
Journal Entry:
Date: .........................
Particulars Debit Credit
Ac Dr. - Share of Goodwill
To Goodwill Account - -
A's Capital Account 15000 Share of Goodwill
B's Capital Account 10000 Share of Goodwill
To Goodwill Account 25000 -
C's Capital Account 45000
To A's Capital Account 30000
To B's Capital Account 20000
Explanation:
• In the first entry, ac's share of goodwill is debited to his account, and the goodwill account is credited.
• In the second entry, A and B's capital accounts are debited with their respective share of goodwill surrendered, and the goodwill account is credited.
• In the third entry, C's capital account is debited with the amount he brings in, and A and B's capital accounts are credited with the amount they surrender.
• The total of debits and credits is equal, ensuring that the accounting equation is maintained.
Conclusion:
The above journal entry records the admission of a new partner, surrendering of share of goodwill, and valuation of goodwill in the partnership firm. It ensures that the capital accounts of all partners are adjusted accordingly.
Introduction:
In this transaction, a new partner is being admitted into the partnership firm. For this admission, the existing partners, A and B, are surrendering a part of their share of goodwill. Let's understand the journal entry for this transaction.
Step 1: Determine the Existing Profit Sharing Ratio
The profit sharing ratio between A and B is 3:2.
Step 2: Admission of New Partner
A new partner, C, is being admitted to the partnership firm.
Step 3: Surrender of Share of Goodwill
A surrenders 1/5th of his share, whereas B surrenders 2/5th of his share of goodwill.
Step 4: Valuation of Goodwill
The goodwill of the firm is valued at 75000, and ac brings in his share of goodwill, which is retained in the firm's book.
Journal Entry:
Date: .........................
Particulars Debit Credit
Ac Dr. - Share of Goodwill
To Goodwill Account - -
A's Capital Account 15000 Share of Goodwill
B's Capital Account 10000 Share of Goodwill
To Goodwill Account 25000 -
C's Capital Account 45000
To A's Capital Account 30000
To B's Capital Account 20000
Explanation:
• In the first entry, ac's share of goodwill is debited to his account, and the goodwill account is credited.
• In the second entry, A and B's capital accounts are debited with their respective share of goodwill surrendered, and the goodwill account is credited.
• In the third entry, C's capital account is debited with the amount he brings in, and A and B's capital accounts are credited with the amount they surrender.
• The total of debits and credits is equal, ensuring that the accounting equation is maintained.
Conclusion:
The above journal entry records the admission of a new partner, surrendering of share of goodwill, and valuation of goodwill in the partnership firm. It ensures that the capital accounts of all partners are adjusted accordingly.
Community Answer
A and b are partners in a firm sharing profit and losses in the ratio ...
1. Cash a/c..... 21000
To Premium for goodwill a/c 21000
(Being Premium for goodwill brought in by C)
2. Premium for goodwill a/c.... 21000
To A's Capital a/c 9000
To B's Capital a/c 12000
(Being premium for goodwill brought in by C, distributed among the partners in the ratio 3:4)
Working Note:
A's old share= 3/5
B's old share= 2/5
C is admitted as a new partner.
A's sacrifice= 3/5 * 1/5
= 3/25
B's sacrifice= 2/5 * 2/5
= 4/25
Sacrificing ratio= 3:4
C's share= 3/25 + 4/25
= 7/25
Hence, C's share of goodwill= 7/25 * 75000
= 21000
To Premium for goodwill a/c 21000
(Being Premium for goodwill brought in by C)
2. Premium for goodwill a/c.... 21000
To A's Capital a/c 9000
To B's Capital a/c 12000
(Being premium for goodwill brought in by C, distributed among the partners in the ratio 3:4)
Working Note:
A's old share= 3/5
B's old share= 2/5
C is admitted as a new partner.
A's sacrifice= 3/5 * 1/5
= 3/25
B's sacrifice= 2/5 * 2/5
= 4/25
Sacrificing ratio= 3:4
C's share= 3/25 + 4/25
= 7/25
Hence, C's share of goodwill= 7/25 * 75000
= 21000
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A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions?
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A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions?.
A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions?.
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A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions?, a detailed solution for A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions? has been provided alongside types of A and b are partners in a firm sharing profit and losses in the ratio of 3 : 2 a new partner is admitted A surrenders 1/5th of his share and B surrenders 2/5th of his share in favour of c for the purpose of seas admission Goodwill of the firm is valued at 75000 and ac brings any share of goodwill in case which is retained in the firms book journalise the above transactions? theory, EduRev gives you an
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