X and Y are partners in a firm sharing profits in the ratio of 5 : 3. On March 1, 2017 they admitted Z as a new partner. The new profit sharing ratio will be 4 : 3 : 2. Z brought in Rs. 1,00,000 in cash as his share of capital but could not bring any amount for goodwill in cash. The firm's goodwill on Z's admission was valued at Rs. 1,80,000. At the time of Z's admission goodwill existed in the books of the firm at Rs. 2,40,000.
You are required to pass necessary journal entries in the books of the firm on Z's admission.

Explanation

(a) When Goodwill is adjusted through new Partner's Current Account :

Working Note : Calculation of Sacrificing Ratio :
Old Ratio - New Ratio
X's Sacrifice = ` 5/8 - 4/9 = (45-32)/72 = 13/72`
Y's Sacrifice = ` 3/8 - 3/9 = (27-24)/72 = 3/72`
Thus , Sacrificing ratio between X and Y = 13 : 3
ALTERNATE SOLUTION : ltBRgt (b) When Goodwill is raised and written off :