I have a question regarding the admission of new partner in the partnership. For example, in the partnership ABC:

Partner A has a credit balance of $390,600 in his capital account;

Partner B has a credit balance of $209,000 in his capital account;

Partner C has a credit balance of $260,400 in his capital account;

They share gains and losses in the ratio 20% to A, 40% to B and 40% to C. In the personal transaction, partner B sells his equity to Y, who pays B $200,000 for one-half of his interest.

So what I would like to clarify is that we will debit partner’s B capital account for $104,500 (50%) and credit Y for $104,500. What happens to the rest of the capital balance of partner B? Will it be a bonus to partners A and C? Is $104,500 gets split between A and C (2:4)? Would the entries below be correct in this situation?

Partner B, capital 209,000

Partner Y, capital 104,500

Partner A, capital 34,833

Partner C, capital 69,667



Now, since partner Y only has half of the interest, will he be getting 40% of gains and losses or will it be 20%? Or would the new partnership have a new agreement on allocation of gains and losses?

Thank you in advance :)

I want to find the entries

Partner B is selling his interest to Y. His capital is now 209,000 of which half (104,500) will be transferred to Y. There will be no change in the accounts of other partners. The revised profit sharing ratio will now be A-20%, B 20%, C 40% and Y 20%. The extra mount of 95,500 (200,000 - 104,500) represents the share of goodwill of B for surrendering his interest to Y.

The extra amount will not be accounted for and it should be treated as personal income of partner c
Same as if any individual sell shares on profit, the profit will be his personal income and will not included in the company income or goodwill