Question : A and B are partners sharing profits & losses as 2: 1. C and D are admitted and the profit sharing ratio becomes 4: 2: 3: 1. Goodwill is valued at Rs.2,00,000. D brings the required goodwill and Rs.50,000 cash for Capital. C brings in Rs.50,000 cash and Rs. 40,000 worth of stock as his capital in addition to the required amount of goodwill in cash. Cash contributed by the new partner at the time of admission and the amount of goodwill brought by a new partner will be
Option 1: Debited bank with Rs 50,000 and credited premium for goodwill Rs 2,00,000
Option 2: Debited bank with Rs 1,10,000 and credited premium for goodwill Rs 60,000
Option 3: Debited bank Rs 50,000 and credited premium for goodwill Rs 2,00,000
Option 4: None of the above
Correct Answer: Debited bank Rs 50,000 and credited premium for goodwill Rs 2,00,000
Solution :
Answer =
Debited bank Rs 50,000 and credited premium for goodwill Rs 2,00,000
Bank A/c Dr. 70,000
To D's Capital A/c 50,000
To Premium tor Goodwill A/c 20,000
(The amount of capital and goodwill/premium brought in cash, i.e,"Rs. 50,000 + Rs.20,000))
Bank A/c Dr. 1,10,000
Stock A/c Dr. 40,000
To C's Capital A/c 90,000
To Premium for Goodwill A/c 60,000
(The amount of capital and goodwill brought in cash, i.e., Rs. 50,000+Rs 60,000 and stock worth Rs. 40,000 for capital)
The premium for Goodwill A/c Dr. 80,000
Tout's Capital A/c 53,333
To B's Capital A/c 26,667
(The amount of goodwill/premium transferred to old partners in sacrificing ratio i.e., 2: 1)
Working Notes:
(1) Calculation of goodwill of D's share and C's share :
Value of the total goodwill of the firm = Rs. 2,00,000
Therefore, D's share of goodwill = Rs. $2,00,000 \times \frac{1}{10}=$ Rs. 20,000
C's share of goodwill = Rs. $2,00,000 \times \frac{3}{10}=$ Rs. 60,000
(2) Calculation of Sacrificing Ratio: Sacrifice Ratio = Old Ratio-New Ratio
A's Sacrifice =$\frac{2}{3}-\frac{4}{10}=\frac{8}{30}$
B's Sacrifice =$\frac{1}{3}-\frac{2}{10}=\frac{4}{30}$
Thus Sacrifice Ratio =$\frac{8}{30}: \frac{4}{30}=8: 4=2: 1$
Hence, the correct option is 3.