A and B are partners sharing profits and losses in the ratio 2:1. C and D are admitted and new proftis sharing ratio becomes 4:2:3:1. Goodwill is valued at Rs 20,000. D brings requird goodwill and Rs 5000 cash for capital. C brings in Rs 5000 cash and stock worth Rs 6000 as his capital in addition to the required amount of goodwill in cash.

Show the necessary journal entries in the books of the firm

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

 

 

 

 

 

 

Cash A/c

Dr

 

18,000

 

 

Stock A/c

Dr

 

6,000

 

 

To Premium on Goodwill A/c

 

 

 

8,000

 

To C”s Capital A/c

 

 

 

11,000

 

  To D”s Capital A/c

 

 

 

5,000

 

(Cash and stock brought in by the new partners C and D)

 

 

 

 

       

Working Notes

Total goodwill of firm = Rs 20,000

New Profit Sharing Ratio = 4:2:3:1

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