Pass journal entries to record the following arrangements in

21 :- Pass journal entries to record the following arrangements in the books of the firm:
(a) B and C are partners sharing profits in the ratio of 3:2. D is admitted paying a premium (goodwill) of Rs 20,000 for 1/4th share of the profits, shares of B and C remain as before.
(b) B and C are partners sharing profits in the ratio of 3:2. D is admitted paying a premium of Rs 21,000 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.

Solution :-

WORKING NOTES :-
(a) Calculation of their new profit sharing ratio
Old ratio = 3:2
D is admitted for 1/4th share
Let the total share of firm be 1
Remaining share will be 1 – 1/4 = 3/4
B’s new share = 3/4 x 3/5 = 9/20
C’s new share = 3/4 x 2/5 = 6/20
D’s share = 1/4 x 5/5 = 5/20
New profit sharing ratio of the B, C and D is 9:6:5

(b) Calculation of sacrificing ratio of B and C
Old share – new share
B = 3/5 – 9/20 = 3/20
C = 2/5 – 6/20 = 2/20
Sacrificing ratio of B and C is 3:2

WORKING NOTES :-
(a) Calculation of new profit sharing ratio
B’s new share = 3/5 – 1/6 = 13/30 x 2/2 = 26/60
C’s new share = 2/5 – 1/12 = 19/60
D’s share = 1/4 x 15/15 = 15/60

(b) Calculation of sacrificing ratio
Old ratio – new ratio
B = 3/5 – 26/60 = 10/60
C = 2/5 – 19/60 = 5/60
Thus, their sacrificing ratio is 2:1