## Adil and Bhavya are partners sharing profits and losses in the ratio of 7: 5. They admit Cris, their manager, into partnership who is to get 1/6th share in the business. Cris brings in Rs. 1,00,000 for his capital and Rs. 36,000 for the 1/6th share of goodwill which he acquires 1/24th from Adil and 1/8th from Bhavya. Profits for the first year of the new partnership was Rs. 2,40,000. Pass necessary Journal entries for Cris’s admission and apportion the profit between the partners.

SOLUTION

Working Note:
WN1

Sacrificing Ratio = 1/24: 1/8 = 1: 3

WN2
Distribution of Cris’s share of Goodwill (in sacrificing ratio)

Adil will get = 36,000 × 1/4 = 9000,0
Bhavya will get = 36,000 × 3/4 = 27,000

WN3
Calculation of New Profit-Sharing Ratio

New Ratio = Old Ratio – Sacrificing Ratio
Adil’s = 7/12 – 1/12= 13/24
Bhavya’s = 5/12 – 1/8 = 7/24

New profit-sharing ratio = Adil: Bhavya: Cris
New profit-sharing ratio = 13/24: 7/24: 1/6 = 13: 7: 4

WN4
Distribution of Profit earned after Cris’s admission (in new ratio)

Adil will get = 2,40,000 × 13/24 = 1,30,000
Bhavya will get = 2,40,000 × 7/24 = 70,000
Cris will get = 2,40,000 × 4/24 = 40,000