A, B and C are in partnership sharing profits in the ratio

36 :- A, B and C are in partnership sharing profits in the ratio of 5:4:1. Two new partners D and E are admitted and the new profit-sharing ratio is 3:4:2:2:1. D is to pay Rs 90,000 for his share of goodwill but E is unable to bring his share of goodwill. Both the new partners introduced Rs 1,20,000 each as their capital.
You are required to pass necessary journal entries.

Solution :-

WORKING NOTES :-
(a) Calculation of sacrificing/gaining share
A = 5/10 – 3/12 = 15/60
B = 4/10 – 4/12 = 4/60
C = 1/10 – 2/12 = -4/60 (gain)

(b) Calculation of share of goodwill
Goodwill = D’s share of goodwill x reciprocal of his share
= 90,000 x 12/2 = Rs 5,40,000
D’s share of goodwill = 90,000
E’s share of goodwill = 5,40,000 x 1/12 = Rs 45,000
C’s share of goodwill = 5,40,000 x 4/60 = Rs 36,000 (debit)
A’s share of goodwill = 1,71,000 x 15/19 = Rs 1,35,000 (credit)
B’s share of goodwill = 1,71,000 x 4/19 = Rs 36,000 (credit)