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
To Premium on Goodwill A/c
To C”s Capital A/c
To D”s Capital A/c
(Cash and stock brought in by the new partners C and D)
Total goodwill of firm = Rs 20,000
New Profit Sharing Ratio = 4:2:3:1