B and C are in partnership sharing profits and losses as 3:1

22 :- B and C are in partnership sharing profits and losses as 3:1. They admit D as a partner in the firm, D pays premium of Rs 15,000 for 1/3^rd share of the profits. As between themselves, B and C agree to share future profits and losses equally.
Draft journal entries showing appropriations of the premium money.

Solution :-

WORKING NOTES :-
(a) Calculation of their New profit sharing ratio
Old ratio = 3:1
Let the total share of the firm be 1
Remaining share = 1 – 1/3 = 2/3 which will be distributed among B and C in 1:1
B’s new share = 2/3 x 1/2 = 2/6
C’s new share = 2/3 x 1/2 = 2/6
D’s share = 1/3 x 2/2 = 2/6
Thus, their new PSR is 1:1:1

(b) Calculation of their Sacrificing and gaining share
Old share – new share
B = 3/4 – 1/3 = 5/12 (sacrifice)
C = 1/4 – 1/3 = -1/12 (gain)

(c) Calculation of their Share of Goodwill
Goodwill of the firm = 15,000 x 3 = Rs 45,000
C will also bring premium for goodwill as he gains on admission of D
C’s share = 45,000 x 1/12 = Rs 3,750 (debit)
B’s share of goodwill = 45,000 x 5/12 = Rs 18,750