question_answer

AK and BK are partners sharing profits and losses in the ratio of 5:1. They agreed to admit CK as a partner. Profits will be shared equally in future. CK brought in Rs. 60,000 as a premium for his share in profits. Pass necessary journal entries in the books of the firm.

Answer:

JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Bank A/c	Dr		60,000
	To Premium for Goodwill A/c				60,000
	(Being amount of premium brought in by CK)
	Premium for Goodwill A/c	Dr		60,000
	BK's Capital A/c	Dr		30,000
	To AK's Capital A/c				90,000
	(Being sacrificing partner's account is credited with his share of sacrifice)

Working Note Sacrificing Ratio = Old Share - New Share \[AK=\frac{5}{6}-\frac{1}{3}=\frac{5-2}{6}=\frac{3}{6}Sacrifice\] \[BK=\frac{1}{6}-\frac{1}{3}=\frac{1-2}{6}=\left( \frac{1}{6} \right)gain\] \[BK\,will\,Compensate=60,000\times \frac{3}{1}\times \frac{1}{6}=Rs.\,30,000\]