Question

Harry, Pammy and Sunny are partners sharing profits in the ratio of 3:2:1. Goodwill is appearing in the books at a value of Rs. 60, 000. What is the journal entry for the following case?

Options

• Harry's Capital A/c 30000 Dr Pammy's Capital A/c 20000 Dr Sunny's Capital A/c Dr 10000 To Goodwill A/c 60,000.

• Harry's Capital A/c 20000 Dr Pammy's Capital A/c 30000 Dr Sunny's Capital A/c Dr 10000 To Goodwill A/c 60,000.

• Harry's Capital A/c 10000 Dr Pammy's Capital A/c 20000 Dr Sunny's Capital A/c Dr 30000 To Goodwill A/c 60,000.

• None of these

Answer 1

Harry's Capital A/c 30000 Dr Pammy's Capital A/c 20000 Dr Sunny's Capital A/c Dr 10000 To Goodwill A/c 60,000.

Explanation:

In the former ratio, existing goodwill was written down.