X and Y share profits and losses in the ratio of 3 : 2. They admit Z as a partner who pays ₹ 72,000 as premium for goodwill for 1/4th share in the future profits of the firm

X and Y share profits and losses in the ratio of 3 : 2. They admit Z as a partner who pays ₹ 72,000 as premium for goodwill for 1/4th share in the future profits of the firm.

Pass Journal entries appropriating the premium money and show the new profit sharing ratio in each of the following cases:

(i) if he acquires his share of profits in the original ratio of existing partners.

(ii) if he acquires his share of profits in equal proportions from the existing partners.

(iii) if he acquires his share in the ratio of 2 : 3 from the existing partners.

(iv) if he acquires his share of profits as 7/32th from X and 1/32th from Y.

[Ans. New Ratio : Case (i) 9 : 6 : 5, Case (ii) 19 : 11 : 10, Case (iii) 2 : 1 : 1, Case (iv) 61 : 59 : 40

Sacrificing Ratio for goodwill distribution:

Case (i) 3 : 2, Case (ii) 1 : 1, Case (iii) 2 : 3, Case (iv) 7 : 1]