Question

X and Y are partners sharing profits in the ratio of 5:4. They admit Z in the firm for 1/3rd profit, which he takes 2/9^th from X and 1/9^th from Y and brings Rs. 1500 as premium. Pass the necessary Journal entries on Z’s admission. 

Answer 1

Cash A/C  Dr.	1500
To premium A/C		1500
(cash brought in by Z for his share of goodwill)
Premium A/C Dr	1500
To X’s capital A/C	1000
To Y’s Capital A/C		500
(Goodwill distributed among sacrificing partners in the ratio of 2:1.)