A, B and C are in partnership profits and losses in the ratio of 5 : 4 : 1 respectively. Two new partners D and E are admitted. The profits are now to to shared in the ratio of 3 : 4 : 2 : 1 respectively, D is to pay RS.90,000 for his share of Goodwill but E has inscfficent cash to pay for Goodwill. Both the new partners introduces RS.1,20,000 each as their Capital. You are pass necessary Journal entries.

Explanation

(i) Sacrificing Ratio between A and B = 15 : 4. Since C is gaining 4/60th share in the profits, he will be also compensate A and B proprotionately `(i.e., RS.5,40,000xx4//60=RS.36,000)`.
For Adjustment of Goodwill: Dr. C's Capital A/c-RS.36.000, E's Capital/Current A/c-RS.45,000 and Premium for Goodwill A/c-RS.90,000, Cr. A's Capital A/c-RS.1,35,000 and B's Capital A/c-RS.36,000.