Priya and Riya were partners in a firm sharing profits in the ratio of 3:1.On 1st April 2015 they admitted Siya As new partner for 1/4th share in the profits of the firm.On the date of Siya's admission the balance sheet of Priya and Riya showed a General Reserve of Rs 80000, a debit balance of Rs 40000 in Profit and Loss A/c and Workmen Compensation Fund of Rs20000.
The following was agreed on Siya's admission.
i) Siya will bring Rs200,00 as her capital and the necessary amount of cash as premium for his share of goodwill.
ii) Goodwill of the firm is valued at Rs 80000.
iii) There was acclaim of Workmen compensation for Rs28000.
iv) The partners decided to share future profits in the ratio of 2:1:1.
Pass the necessary journal entries for the above on Siya's admission.
|General Reserve A/c||Dr.||80,000|
|To Priya’s Capital A/c||60,000|
|To Riya’s Capital A/c||20,000|
|(Received General Reserve Transferred to Capital accounts)|
|Priya’s Capital A/c||Dr.||30,000|
|Ria’s Capital A/c||Dr.||10,000|
|To Profit & loss A/c||40,000|
|(Being Profit and loss Transferred to capital account of old partners)|
|Workmen Compensation Fund A/c||Dr.||20,000|
|To Revalution A/c||20,000|
|(Being Fund Transferred to revalution account for payment of liability)|
|To Claim of Workmen Compensation A/c||28,000|
|(Being Claim of workmen compensation booked)|
|To Siya’s Capital A/c||20,000|
|To Premium For Goodwill A/c||20,000|
|(Being Siya brought his share of goodwill and Capital)|
|Premium for Goodwill A/c||Dr.||20,000|
|To Priya’s Capital A/c||20,000|
|(Being Premium for goodwill credited to Priya for her Sacrificing Ratio)|
|Priya’s Capital A/c||Dr.||6,000|
|Riya’s Capital A/c||Dr.||2,000|
|To Revalution A/c||8,000|
|(Being Revalution Loss transferred to old partners )|
|Sacrificing Ratio of Priya and Riya|
|Priya = Old Ratio - New Ratio|
|Riya = Old Ratio - New Ratio||0|
|Therefore only Priya is Sacrificing|
|Chitra's share of Goodwill||20,000|
|Distribution in Sacrificing Ratio|