Pls pls pls explain me this sum clearly
Solution :-
1) In 1st entry, A and C paid 8,100 to B in the ratio of 4:5 as his share of goodwill.
2) In 2nd entry, A and C brought their amount to pay B on his retirement.
3) In 3rd entry, amount of 8,100 paid to B for selling his share, which was brought by A and C in the above 2nd entry.
4) For 4th entry, you have to calculate new profit sharing ratio which is as follows:-
New Profit Share = Old Profit Share + Gain
A's Share = 4/8 + [3/8 x 4/9 (profit share of B acquired)] = 2/3
C's Share = 1/8 + [3/8 x 5/9 (profit share of B acquired)] = 1/3
Then, The amount of profit of 10,500 is to be distributed to A and C's capital account after B's retirement in their new profit sharing ratio which is 2:1.
1) In 1st entry, A and C paid 8,100 to B in the ratio of 4:5 as his share of goodwill.
2) In 2nd entry, A and C brought their amount to pay B on his retirement.
3) In 3rd entry, amount of 8,100 paid to B for selling his share, which was brought by A and C in the above 2nd entry.
4) For 4th entry, you have to calculate new profit sharing ratio which is as follows:-
New Profit Share = Old Profit Share + Gain
A's Share = 4/8 + [3/8 x 4/9 (profit share of B acquired)] = 2/3
C's Share = 1/8 + [3/8 x 5/9 (profit share of B acquired)] = 1/3
Then, The amount of profit of 10,500 is to be distributed to A and C's capital account after B's retirement in their new profit sharing ratio which is 2:1.