Mohan, Naresh and Om were in partnership sharing profits and losses in the ratio of 10:4: 1. On 1st April, 2021 their capitals were 3,00,000; 1,50,000 and
50,000 respectively. On this date they admit Piyush as a new partner and the newprofit sharing ratio is agreed at 5:4:4:2. The following terms were also
agreed upon:
(i) Piyush will bring in 40,000 as his capital.
(ii) He will also bring in his share of goodwill in cash. Goodwill is to be valued
on the basis of capitalisation at 10% of the
average profits of the last three years. Profits of the last three years were:
Year ended 31st March 2019
Year ended 31st March 2020
Year ended 31st March 2021
₹
48,000
75,000
72,000
(iii) The new partner is entitled to an annual salary of ₹7,500 in addition to his
share of profit. Om personally guaranteed that Piyush's share of profit shall
not be less than 30,000.Profits for the year ended 31st March 2022 amounted to 2,10,000 beforecharging Piyush's salary.
Prepare necessary entries at the time of admission of the new partner and show thedistribution of profits for the year ended 31st March, 2022.
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