L M and N are partners sharing profits in the ratio of 3 : 2 : 1. They admit O into partnership. O brings in cash ₹ 4,50,000 as capital and ₹ 1,50,000 as goodwill for 1/5th share of profits

L, M and N are partners sharing profits in the ratio of 3 : 2 : 1. They admit O into partnership. O brings in cash ₹ 4,50,000 as capital and ₹ 1,50,000 as goodwill for 1/5th share of profits. Pass journal entries and find out new profit sharing ratios when: (a) Goodwill is retained in the firm; (b) goodwill is withdrawn by old partners.

[Ans. New Profit sharing ratio = 6 : 4 : 2 : 3.]