Question

Arti and Bharti are partners in a firm sharing profits in 3:2 ratio, They admitted Sarthi for 1/4 share in the profits of the firm. Sarthi brings Rs. 50,000 for his capital and Rs.10,000 for his 1/4 share of goodwill. Goodwill already appears in the books of Arti and Bharti at Rs. 5,000. The new profit sharing ratio between Arti, Bharti and Sarthi will be 2:1:1. Record the necessary journal entries in the books of the new firm?

Answer 1

Arti: Bharti Old Ratio 3:2

Sarthi admitted for\(\frac{3}{20}\) share in new firm Arti: Bharti: Sarthi

New ratio 2:1:1

Sacrificing Ratio = Old Ratio – New Ratio

Arti will receive = 10,000 ×\(\frac{2}{5}\) Bharti will receive 

= 10,000 ×\(\frac{3}{5}\) = 6000.