question_answer

X and Y are partners sharing profits in the ratio of 3 : 2. They admit Z into the firm for \[\frac{3}{10}th\] profit which he takes \[\frac{2}{10}th\] from X and \[\frac{1}{10}th\] from Y and brings a part of his share of premium for goodwill in cash. Fill in the missing information in the following journal entries and compute the new ratio of X, Y and Z. JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Bank A/c	Dr		....
	To Premium for Goodwill A/c				....
	(........................)
	Premium for Goodwill A/c	Dr		1,20,000
	Z's Current A/c	Dr		3,30,000
	To.....				....
	To.....				....
	(.......................)

 

Answer:

                                                            JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Bank A/c	Dr		1,20,000
	To Premium for Goodwill A/c				1,20,000
	(Being share of goodwill brought in by Z)
	Premium for Goodwill A/c	Dr		1,20,000
	Z's Current A/c	Dr		3,30,000
	To X's Capital A/c				3,00,000
	To Y's Capital A/c				1,50,000
	(Being premium for goodwill credited to old partners in their sacrificing ratio i.e. 2:1)

Working Note Calculation of New Profit Sharing Ratio X?s New Share\[=\frac{3}{5}-\frac{2}{10}=\frac{6-2}{10}=\frac{4}{10}\] Y?s New Share\[=\frac{2}{5}-\frac{1}{10}=\frac{4-1}{10}=\frac{3}{10}\] Z's New Share\[=\frac{2}{10}+\frac{1}{10}=\frac{2+1}{10}=\frac{3}{10}\] i.e. 4 : 3 : 3