A and B are partners in a business sharing profits and losses

30 :- A and B are partners in a business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2025, their capitals were Rs 80,000 and Rs 1,00,000 respectively. On that date, they admit C in partnership and give him 1/4th share in the future profits. C brings Rs 80,000 as his capital and Rs 60,000 as goodwill. The amount of goodwill is withdrawn by the old partners in cash. Pass the journal entries and show the capital Accounts of all the partners. Calculate proportion in which partners would share partners would share profits and losses in future.

Solution :-

WORKING NOTES :-
(a) Calculation of New profit sharing ratio
Old ratio = 1:2
C was admitted for 1/4th share
Remaining share of the firm = 1 – 1/4 = 3/4
A’s new share = 3/4 x 1/3 = 3/12
B’s new share = 3/4 x 2/3 = 6/12
C’s share = 1/4 x 3/3 = 3/12
Thus, New PSR of A, B and C is 1:2:1

(b) Calculation of sacrificing ratio of A and B
A = 1/3 – 1/4 = 1/12
B = 2/3 – 2/4 = 2/12
Thus, sacrificing ratio of A and B is 1:2