Accounting For Partnership Firms : Admission of A Partner
1 : (When new partner acquires his share from old partners in the old ratio).
A and B are partners in a firm sharing profits and losses in the ratio 1:2. TI admitted C into the
partnership and decided to give him 1/3rd share of the full profits. Find the new ratio of the
partners.
Solution :
(i) Calculation of Sacrifice Share :
A’s sacrifice = 1/3 of 1/3 = 1/9
B’s sacrifice = 2/3 of 1/3 = 2/9
Sacrificing Ratio = 1/9 : 2/9 = 1:2
(ii) Calculation of new Profit sharing Ratio :
New share = Old share – Sacrifice share
A’s new share = 1/3 – 1/9 =
B’s new share = 2/3 – 2/9 =
C’s new share = 1/9 + 2/9 = 3/9
2 : (When new partner acquires his share from old partners in agreed share) L and M are
partners in a firm sharing profits and losses in the ratio of 7:3. They admitted N for 3/7th
share which he takes 2/7th from L and 1/7 from M Calculate the new profit sharing ratio.
Solution
(i) As sacrifice share of old partners are given in the question itself, hence there is no need to
calculated it.
(ii) Calculation of New profit sharing ratio :
New share = 7/10 – 2/7 =
L’s new share = 3/10 – 1/7 =
N’s new share = 2/7 + 1/7 = 3/7 (given)
New ratio among L, M and N = 29/70 : 11/70 : 3/7 = 29:11:30/70 29 : 11 : 30
Case (iii) When new partner acquires his/her share from old partners in certain ratio.
3 : X and Y are partners in a firm sharing profit and losses in the ration of 3:2 Z is admitted as
partner in the firm for 1/6th share in profits. Z acquires his share from X and Y in the ratio of 2
: 1 Calculate new profit sharing ratio of partners.
Solution :
(i) Calculation of Sacrifice share :
Given sacrificing Ratio = X : Y 2 : 1,
Therefore,
X’s sacrifice = 2/3 of 1/6 = 2/18
Y’s sacrifice = 1/3 of 1/6 = 1/18
,(ii) Calculation of New Profit Sharing Ratio :
New share = Old share – Sacrifice share
X’s new share = 3/5 – 2/8 =
Y’s new share = 2/5 – 1/18 =
Z’s new share = 2/168 + 1/18 or 1/6 (Given)
New ratio among X, Y and Z = 44/90 : 31/90 : 1/6 = 44 : 31 : 15/19 44 : 31 : 15
Case (iv) When new partner acquires his/her share form old partners as a fraction of their
share.
4 : (When new partner acquire his share form old partners as a fraction of their share).
A and B are partners in a firm sharing profit and losses in the ratio of 5:3. A Surrenders 1/5th
of his share, whereas B surrenders 1/3 of his share in favour of C, a new partner. Calculate
the new profit sharing ratio.
Solution :
(i) Calculation of sacrifice share
A sacrifices 1/5 of his share i.e. 1/5 of 5/8 = 1/8
B sacrifices 1/3th of his share i.e. 1/3 of 3/8 = 3/24 or 1/8
(ii) Calculation of New profit sharing Ratio
New share = Old share – sacrifice share
A’s new share = 5/8 – 1/8 = 4/8
B’s new share = 5/8 – 1/8 = 2/8
C’s new share = 1/8 + 1/8 = 2/8
New ratio among A, B and C = 4/8 : 2/8 : 2/8 = 4 : 2 : 2/8 = 2:1:1
Case (v) When new partner does not acquire his/her share from all partners.
5 : (When new partner does not acquire his share from all partners) A, B and C are partners
sharing profits in the ratio of 3:2:1. They admit D for 1/6 share. C would retain his old share.
Calculate new ratio of all partners.
Solution :
(i) Calculation of sacrifice share : (Only A and B sacrifice in ratio of 3 : 2)
(ii) A’s sacrifices = 3/5 of 1/6 = 3/30 or 1/10
B’s sacrifices = 2/5 of 1/6 = 2/30 or 1/15
C’s sacrifices = Nil
(iii) Calculation of New profit sharing Ratio :
New share = Old share – Sacrifice share
A’s new share = 3/6 – 1/10 =
B’s new share = 2/6 – 1/15 =
C’s new share = 1/6 – 0 = 1/6
, D’s new share = 1/10 + 1/15 =
New ratio among A, B, C and D
24/60 : 24/90 : 1/6 : 1/6 : 1/6
= = 12 : 8 : 5 : 5
Case (vi) When more than one partner is admitted.
6 : (When more than one partner is admitted simultaneously) : X and Y are partners sharing
profits in the ratio of 3:2. They admit P and Q as new partners. X surrendered 1/3 of his share
in favour of P and Y surrendered ¼ of his share in favour of Q. Calculate the new profit
sharing ratio of X, Y, P and Q.
Solution :
(i) Calculation of Sacrifice share :
X surrenders 1/3 of his share in favour of P =
Y surrenders 1/4 of his share in favour of Q =
X’s new share = =
Y’s new share = =
New profit sharing ratio = X : Y : P : Q = 6/15 : 6/20 : 3/15 : 2/20 = 4 : 3 : 2 : 1
7 : (All partners sacrifice) : A and B partners sharing profits and losses in the ratio of 3:2.
They admit C into partnership for 1/4 share in profits. C’s brings Rs. 3,00,000 as capital and
Rs. 1,00,000 as goodwill. New profit sharing ratio of the partners shall be 3:3:2. Pass
necessary Journal entries.
Journal
Dat L.F Debit Credit
Particulars
e . (Rs.) (Rs.)
4,00,000
Bank A/c Dr. 1,00,00
To Premium for Goodwill A/c 0
To C’s Capital A/c 3,00,00
(Being the amount of goodwill and capital brought in by new partner C) 0
1 : (When new partner acquires his share from old partners in the old ratio).
A and B are partners in a firm sharing profits and losses in the ratio 1:2. TI admitted C into the
partnership and decided to give him 1/3rd share of the full profits. Find the new ratio of the
partners.
Solution :
(i) Calculation of Sacrifice Share :
A’s sacrifice = 1/3 of 1/3 = 1/9
B’s sacrifice = 2/3 of 1/3 = 2/9
Sacrificing Ratio = 1/9 : 2/9 = 1:2
(ii) Calculation of new Profit sharing Ratio :
New share = Old share – Sacrifice share
A’s new share = 1/3 – 1/9 =
B’s new share = 2/3 – 2/9 =
C’s new share = 1/9 + 2/9 = 3/9
2 : (When new partner acquires his share from old partners in agreed share) L and M are
partners in a firm sharing profits and losses in the ratio of 7:3. They admitted N for 3/7th
share which he takes 2/7th from L and 1/7 from M Calculate the new profit sharing ratio.
Solution
(i) As sacrifice share of old partners are given in the question itself, hence there is no need to
calculated it.
(ii) Calculation of New profit sharing ratio :
New share = 7/10 – 2/7 =
L’s new share = 3/10 – 1/7 =
N’s new share = 2/7 + 1/7 = 3/7 (given)
New ratio among L, M and N = 29/70 : 11/70 : 3/7 = 29:11:30/70 29 : 11 : 30
Case (iii) When new partner acquires his/her share from old partners in certain ratio.
3 : X and Y are partners in a firm sharing profit and losses in the ration of 3:2 Z is admitted as
partner in the firm for 1/6th share in profits. Z acquires his share from X and Y in the ratio of 2
: 1 Calculate new profit sharing ratio of partners.
Solution :
(i) Calculation of Sacrifice share :
Given sacrificing Ratio = X : Y 2 : 1,
Therefore,
X’s sacrifice = 2/3 of 1/6 = 2/18
Y’s sacrifice = 1/3 of 1/6 = 1/18
,(ii) Calculation of New Profit Sharing Ratio :
New share = Old share – Sacrifice share
X’s new share = 3/5 – 2/8 =
Y’s new share = 2/5 – 1/18 =
Z’s new share = 2/168 + 1/18 or 1/6 (Given)
New ratio among X, Y and Z = 44/90 : 31/90 : 1/6 = 44 : 31 : 15/19 44 : 31 : 15
Case (iv) When new partner acquires his/her share form old partners as a fraction of their
share.
4 : (When new partner acquire his share form old partners as a fraction of their share).
A and B are partners in a firm sharing profit and losses in the ratio of 5:3. A Surrenders 1/5th
of his share, whereas B surrenders 1/3 of his share in favour of C, a new partner. Calculate
the new profit sharing ratio.
Solution :
(i) Calculation of sacrifice share
A sacrifices 1/5 of his share i.e. 1/5 of 5/8 = 1/8
B sacrifices 1/3th of his share i.e. 1/3 of 3/8 = 3/24 or 1/8
(ii) Calculation of New profit sharing Ratio
New share = Old share – sacrifice share
A’s new share = 5/8 – 1/8 = 4/8
B’s new share = 5/8 – 1/8 = 2/8
C’s new share = 1/8 + 1/8 = 2/8
New ratio among A, B and C = 4/8 : 2/8 : 2/8 = 4 : 2 : 2/8 = 2:1:1
Case (v) When new partner does not acquire his/her share from all partners.
5 : (When new partner does not acquire his share from all partners) A, B and C are partners
sharing profits in the ratio of 3:2:1. They admit D for 1/6 share. C would retain his old share.
Calculate new ratio of all partners.
Solution :
(i) Calculation of sacrifice share : (Only A and B sacrifice in ratio of 3 : 2)
(ii) A’s sacrifices = 3/5 of 1/6 = 3/30 or 1/10
B’s sacrifices = 2/5 of 1/6 = 2/30 or 1/15
C’s sacrifices = Nil
(iii) Calculation of New profit sharing Ratio :
New share = Old share – Sacrifice share
A’s new share = 3/6 – 1/10 =
B’s new share = 2/6 – 1/15 =
C’s new share = 1/6 – 0 = 1/6
, D’s new share = 1/10 + 1/15 =
New ratio among A, B, C and D
24/60 : 24/90 : 1/6 : 1/6 : 1/6
= = 12 : 8 : 5 : 5
Case (vi) When more than one partner is admitted.
6 : (When more than one partner is admitted simultaneously) : X and Y are partners sharing
profits in the ratio of 3:2. They admit P and Q as new partners. X surrendered 1/3 of his share
in favour of P and Y surrendered ¼ of his share in favour of Q. Calculate the new profit
sharing ratio of X, Y, P and Q.
Solution :
(i) Calculation of Sacrifice share :
X surrenders 1/3 of his share in favour of P =
Y surrenders 1/4 of his share in favour of Q =
X’s new share = =
Y’s new share = =
New profit sharing ratio = X : Y : P : Q = 6/15 : 6/20 : 3/15 : 2/20 = 4 : 3 : 2 : 1
7 : (All partners sacrifice) : A and B partners sharing profits and losses in the ratio of 3:2.
They admit C into partnership for 1/4 share in profits. C’s brings Rs. 3,00,000 as capital and
Rs. 1,00,000 as goodwill. New profit sharing ratio of the partners shall be 3:3:2. Pass
necessary Journal entries.
Journal
Dat L.F Debit Credit
Particulars
e . (Rs.) (Rs.)
4,00,000
Bank A/c Dr. 1,00,00
To Premium for Goodwill A/c 0
To C’s Capital A/c 3,00,00
(Being the amount of goodwill and capital brought in by new partner C) 0
