Madhu and Neha were partners in a firm sharing profits and losses in the ratio of 3: 5. Their fixed capitals were ₹4,00,000 and ₹6,00,000 respectively. On 1.1.2016, Tina was admitted as a new partner for share in the profits. Tina acquired her share of profit from Neha. Tina brought ₹ 4,00,000 as her capital which was to be kept fixed like the capitals of Madhu and Neha. Calculate the goodwill of the firm on Tina's admission and the new profit sharing ratio of Madhu, Neha and Tina. Also, pass necessary journal entry for the treatment of goodwill on Tina's admission considering that Tina did not bring her share of goodwill premium in cash.

Madhu and Neha were partners in a firm sharing profits and losses in the ratio of 3: 5. Their fixed capitals were ₹4,00,000 and ₹6,00,000 respectively. On 1.1.2016, Tina was admitted as a new partner for $1 fourth th$ share in the profits. Tina acquired her share of profit from Neha. Tina brought ₹ 4,00,000 as her capital which was to be kept fixed like the capitals of Madhu and Neha. Calculate the goodwill of the firm on Tina's admission and the new profit sharing ratio of Madhu, Neha and Tina. Also, pass necessary journal entry for the treatment of goodwill on Tina's admission considering that Tina did not bring her share of goodwill premium in cash.

Answer

Working Note:
Calculation of Tina's Share of Goodwill (Hidden)

Total capital of the firm = 16,00,000

open parentheses 4 comma 00 comma 000 space cross times space 4 over 1 close parentheses

Net worth = 4,00,000 + 6,00,000 + 4,00,000 = 14,00,0000
Hidden Goodwill = Total Capital of the firm - Net Worth
= 16,00,000 - 14,00,000
= 2,00,000
Tina's Share in Goodwill =

2 comma 00 comma 000 space cross times space 1 fourth space equals space 50 comma 000

Calculation of New PSR:
Madhu's Share =

3 over 8

Neha's Share =

5 over 8 minus 1 fourth space equals space 3 over 8

Tina's Share =

1 fourth

New Share = 3 : 3 : 2

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