(When An Existing Partner also Gains on Admission of New Partner).
Ram and Shyam are partnres sharing profits and losses in the ratio of 4:1. They admit Mohan into the partnership on 1st April, 2019 for 1/3rd share in porfits. It was agreed that Ram, Shayam and Mohan would share profits equally in future. Mohan brought in RS 50,000 as goodwill for his 1/3rd share in porfits. Pass necessary Journal entries in the books of the firm.

Explanation

working Note:
Calculation of Sacrificing Ratio (Sacrifice = Old Share - New share):
Ram's sacrificing `=(4)/(5)-(1)/(3)=(12-5)/(15)=(7)/(15)`,
Shyam's sacrifice /(Gain) `=(1)/(5)-(1)/(3)=(3-5)/(15)=((2)/(15))`
Since, Shyam is gaining 2/15th share in the profits, therefore, he will also compensate Ram porportionately. For 1/3rd share Mohan brought in RS 50,000 as premium. Therefore, Shyam will compensate Ram by RS 20,000 i.e., RS `50,000xx3//1xx2//15`.