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Question
A and B are partners sharing profits and losses in the ratio of 2 : 1. They take C as a partner for 1/5th share. Goodwill Account appears in the books at ₹ 15,000. For the purpose of C's admission, goodwill of the firm is valued at ₹ 15,000. C is to pay proportionate amount as premium for goodwill which he pays to A and B privately.
Pass necessary entries.
Solution
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Journal Entry |
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Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
|
A’s Capital A/c |
Dr. |
|
10,000 |
|
|
|
B’s Capital A/c |
Dr. |
|
5,000 |
|
|
|
To Goodwill A/c |
|
|
15,000 |
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|
|
(Goodwill written-off between A and B in the old ratio of 2:1) |
|
|
|
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Note- Goodwill brought in by C is not recorded in the books of the firm as the amount for goodwill is privately paid to A and B.
Working Note: Goodwill Written-off
A's Capital will be debited by = 15,000 x `2/3` = Rs.10,000
B's Capital will be Credited by = 15,000 x `1/3` = Rs. 5,000
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| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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|
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|
| 78,600 | 78,600 |
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Amount(₹) |
Assets | Amount(₹) |
| Capitals : |
|
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||
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||
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| ? | = | `"Total Profit"/"Number of Years"` |
