Question 21:
B
and C
are in partnership sharing profits and losses as 3 :
1. They admit D into the firm, D pays premium of ` 15,000 for 1/3rd share of the profits. As between
themselves, B and C agree to share future profits and losses
equally. Draft Journal entries showing appropriations of the premium money.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

15,000 


To Premium for Goodwill A/c 



15,000 

(D brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

15,000 


To B’s Capital A/c 



15,000 

(Premium for goodwill transferred to B’s Capital) 











C’s Capital A/c 
Dr. 

3,750 


To B’s Capital A/c 



3,750 

(Goodwill charged from C’s
Capital Account due 










WN1
Calculation of Sacrificing Ratio:
Let combined share of all partners after D’s admission be = 1
Combined share of B and C after C’s admission be = 1
=11/3
=2/3
B and C each share of profit after D’s admission will be
=2/3×1/2 
=2/6 =1/3
each 
Sacrificing
Ratio =Old ratio new ratio
A’s 
=3/41/3 

=5/12 (Sacrifice) 
B’s 
=1/41/3 

=1/12(gain) 
WN2
C is gaining in new the firm. Hence, C’s gain in goodwill will be
debited to his capital and given to B (sacrificing partner).
Goodwill of the firm= premium of Goodwill brought by D × reciprocal of D’s share
=15,000×3/1=45,000
C’s share of gain in goodwill= goodwill of the firm × C’s share of gain
=45,000×1/12=3,750
Question 22:
Geeta and Sunita are partners
in a firm sharing profits in the ratio of 3 : 2. They
admit Anita as a new partner. The new profitsharing ratio
between Geeta, Sunita
and Anita will be 5 : 3 : 2. Anita brought
in `25,000
for his share of premium for goodwill. Pass necessary Journal entries for the
treatment of goodwill.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

25,000 


To Premium for Goodwill A/c 



25,000 

(Anita brought his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

25,000 


To Geeta’s Capital A/c 



12,500 

To Sunita’s Capital A/c 



12,500 

(Ania’s share of Goodwill distributed in Geeta and Sunita in their sacrificing Ratio) 










Working Notes:
WN1
Calculating of Sacrificing Ratio
Sacrificing
Ratio =Old ratio new ratio

Geeta’s 
=3/55/10 




=1/10 



Sunita’s 
=2/53/10 




=1/10 



Geeta 

Sunita 

Sacri ficing Ratio = 
1/10 
: 
1/10 


1 

1 

WN2
Distribution of Geeta’s share of Goodwill
Geeta and Sunita each will get =25,000×1/2=12,500
Question 23:
A and B are in
partnership sharing profits and losses in the ratio of 5 :
3. C is admitted as a partner who pays ` 40,000 as capital and the necessary amount of goodwill
which is valued at ` 60,000 for the firm. His share of profits will be 1/5th
which he takes 1/10th from A and 1/10th from B.
Pass Journal entries and also calculate future profitsharing ratio of the
partners.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 


Cash A/c 
Dr. 

52,000 


To C’s Capital A/c 



40,000 

To Premium for Goodwill A/c 



12,000 

(C brought Capital and his share of goodwill in cash) 











Premium for Goodwill A/c 
Dr. 

12,000 


To A’s Capital A/c 



6,000 

To B’s Capital A/c 



6,000 

(C’s share of Goodwill distributed in A and B) 










Working Notes
WN1

A 

B 
Sacrificing Ratio = 
1/10 
: 
1/10 

1 

1 
WN2
Calculation of new profit sharing Ratio

A 
B 
OLD RATION 
5 : 
3 
New
ratio= old ratio – sacrificing ratio

A’s 
=5/81/10 




=21/40 



B’s 
=3/81/10 




=11/40 



X 

Y 

Z 

New profit sharing ratio = 
21/40 
: 
11/40 
: 
1/5 

= 
21/40 
: 
11/40 
: 
8/40 

WN3
Distribution of C’s share of Goodwill (in Sacrificing Ratio)
A and B each will get =12,000×1/2=6,000
Question 24:
Adil and Bhavya are partners
sharing profits and losses in the ratio of 7 : 5. They
admit Cris, their Manager, into partnership
who is to get 1/6th share in the business. Cris
brings in ` 1,00,000 for his capital
and ` 36,000 for the 1/6th share of goodwill which he acquires
1/24th from Adil and 1/8th from Bhavya. Profits for the first year of the new
partnership was ` 2,40,000. Pass necessary Journal
entries for Cris's admission and
apportion the profit between the partners.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit ` 
Credit ` 








Cash A/c 
Dr. 

1,36,000 


To Cris’s Capital A/c 



1,00,000 

To Premium for Goodwill A/c 



36,000 

(Cris brought capital and his share of goodwill) 











Premium for Goodwill A/c 
Dr. 

36,000 


To Adil’s Capital A/c 



9,000 

To Bhavya’s Capital A/c 



27,000 

(Cris’s share of goodwill transferred to Adil and Bhavya in their sacrificing ratio i.e. 3:1) 











Profit and Loss Appropriation A/c 
Dr. 

2,40,000 


To Adil’s Capital A/c 



1,30,000 

To Bhavya’s Capital A/c 



70,000 

To Cris’s Capital A/c 



40,000 

(Profit after Cris’s admission distributed) 










Working Note:
WN1

Adil 

Bhavya 
Sacrificing Ratio = 
1/24 
: 
1/8 

1 
: 
3 
WN2
Distribution of Cris’s share of Goodwill (in sacrificing ratio)
Adil will get =3,600×1/4=900
Bhavya will get =3,600×3/4=2,700
WN3
Calculation of New Profit Sharing Ratio
New
ratio= old ratio – Sacrificing Ratio

Adil’s 
=7/121/24 




=13/24 



Bhavya’s 
=5/121/8 




=7/24 



Adil 

Bhavya 

Cris 

New profit sharing ratio= 
13/24 
: 
7/24 
: 
1/6 

= 
13/24 
: 
7/24 
: 
4/24 

= 
13 
: 
7 
: 
4 

WN4
Distribution of Profit earned after Cris’s admission (in new ratio)
Adil will get =2,40,000×13/24=1,30,000
Bhavya will get =2,40,000×7/24=70,000
Cris will get =2,40,000×4/24=40,000
Question 25:
Aayush and Aarushi are
partners sharing profits and losses in the ratio of 3: 2. They admitted Naveen
into partnership for 1/4th share. Goodwill of the firm was to be valued at
three years' purchase of super profits. Average net profit of the firm was
20,000. Capital investment in the business was 50,000 and Normal Rate of Return
was 10%. Calculate the amount of Goodwill premium brought by Naveen. (CBSE
2023)
Answer:
Normal Profit = 50,000×10/100=5,000
Super Profit = 20,0005,000
Super Profit = 15,000
Goodwill =15,000×3=45,000
Goodwill Premium brought by
Naveen = 45,000×1/4 = 11,250
Ts Grewal Solution 20242025
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Class 12 / Volume – I