Gold and Silver are partners sharing profits and losses in the ratio of 2 : 5. They admit Copper on the condition that he will bring 14,000 as his share of goodwill to be distributed between Gold and Silver. Copper's share in the future profits or losses will be 1/4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by Copper will be received by Gold and Silver?
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Subject:
Accountancy -
Author:
heidi97 -
Created:
1 year ago
Answers 2
Explanation:
Answer is in the above image
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Author:
fifiqxaa
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Let ,
Profit = 1
Cooper's profit or loss share = 1/4th
[tex]remaining \: = 1 \ - \frac{1}{4 } = \frac{3}{4} [/tex]
Gold's New share =
[tex] \frac{3}{4} \times \frac{2}{7} = \frac{6}{28} [/tex]
Silver's New share =
[tex] \frac{3}{4} \times \frac{5}{7} = \frac{15}{28} [/tex]
Cooper's new share =
[tex] \frac{1}{7} \times \frac{7}{7} = \frac{7}{28} [/tex]
New profit sharing ratio 6:15:7
Journal entry for goodwill brought by copper :-1.
Bank a/c. Dr. 14,000
To premium for goodwill a/c. 14,000
( being goodwill brought by
copper)
2.
Premium for goodwill a/c. Dr. 14,000
To Gold's a/c 4,000
To silver's a/c 10,000
(being goodwill distributed)
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