Question

A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted D as a new partner for 1/7th share in profits of the firm. D brought in Rs 1,00,000 as his capital and Rs 45,000 as goodwill. Record necessary journal entries.

Answer 1

In this position Old Profit Share Ratio and Sacrifice Ratio will equal.
Cash A/c Dr. 1,45,000
To D’s Capital A/c 1,00,000
To Goodwill A/c 45,000
(Being amount of capital out goodwill brought in cash)
Goodwill A/c Dr. 45,000
To A’s Capital A/c
To B’s Capital A/c
To C’s Capital A/c
(Being goodwill transferred to old partners capital a/c)