Radha and Tanvi are partners in a firm sharing profit in the ratio 5 : 3. They admitted Garvit as a new partner for 1/4th share in the profit. Garvitbrings Rs. 60,000 for her share of goodwill and Rs.2,40,000 for capital. Amount of goodwill brought in by Garvit is withdrawn by old partners. Make journal entries in the books of the firm after the admission of Garvit. The new profit sharing ratio will be 2 : 1 : 1.
Working Note:
Calculation of sacrificing ratio [existing ratio – new ratio]
Radha’* sacrificing ratio: 5/8 – 2/4 = 1/8
Tanvi’* sacrificing ratio: 3/8 – 1/4 = 1/8
Sacrificing ratio of Radha and Tanvi: 1 : 1
