X and Y are partners sharing profits in the ratio of 5 : 4 They admit Z into - Accountancy - Reconstitution- Admission of a Partner

Question

X and Y are partners sharing profits in the ratio of 5 : 4 They
admit Z into the firm for 1/3rd profits which he takes 2/9 from X
and 1/9 from Y and brings 1,500 as premium Pass necessary journal
entries on Z's admission

Jayati Jawa · Accepted Answer

Hey Chanchal,
In this question, the word 'from' has been used, which represents
the sacrificing share of the existing partners In other words, 2/9
represents the sacrificing share of X and 1/9 represents the
sacrificing share of Y
So, the sacrificing ratio = 2:1

Now, we pass the Journal entries

Journal Entry

Date
Particulars
L F
Debit Amount
Rs
Credit Amount
Rs

Bank A/c
Dr

1,500

To Premium for Goodwill A/c

1,500

(Premium for goodwill brought in by
Z)

Premium for Goodwill A/c
Dr

1,500

To X’s Capital A/c

1,000

To Y’s Capital A/c

500

(Premium for goodwill distributed in the
sacrificing ratio i e 2:1)

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	Journal Entry
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

		Bank A/c	Dr.		1,500
		To Premium for Goodwill A/c				1,500
		(Premium for goodwill brought in by Z)

		Premium for Goodwill A/c	Dr.		1,500
		To X’s Capital A/c				1,000
		To Y’s Capital A/c				500
		(Premium for goodwill distributed in the sacrificing ratio i.e. 2:1)

X and Y are partners sharing profits in the ratio of 5 : 4 . They admit Z into the firm for 1/3rd profits which he takes 2/9 from X and 1/9 from Y and brings 1,500 as premium. Pass necessary journal entries on Z's admission.