Geeta and Sunita are partners in a firm sharing profits in the ratio of 3: 2. They admit Anita as a new partner. The new profit-sharing ratio between Geeta, Sunita and Anita will be 5: 3: 2. Anita brought in Rs. 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.

SOLUTION

Working Notes:
WN1
Calculating of Sacrificing Ratio

Sacrificing Ratio = Old ratio- new ratio
Geeta’s = 3/5 – 5/10 = 1/10
Sunita’s = 2/5 – 3/10 = 1/10
Sacrificing Ratio = 1: 1

WN2
Distribution of Geeta’s share of Goodwill-Geeta and Sunita each will get = 25,000 × 1/2 = 12,500