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Question
Sam and Jose are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April 2018, they admitted Joel as a partner. On the date of Joel’s admission, goodwill appeared in the books of the firm at ₹ 30,000. By assuming fluctuating capital method, pass the necessary journal entry if the partners decide to
- write off the entire amount of existing goodwill
- write off ₹ 20,000 of the existing goodwill.
Solution
(a) Write off the entire amount of existing goodwill
Journal Entry
| Date | Particulars | L.F. | Debit ₹ |
Credit ₹ |
| Sam's Capital A/c .......Dr. Jose's Capital A/c .......Dr. To Goodwill A/c (Existing goodwill written off) |
18,000 12,000 - |
- - 30,000 |
(b) Write off ₹ 20,000 of the existing goodwill
Journal Entry
| Date | Particulars | L.F. | Debit ₹ |
Credit ₹ |
| Sam's Capital A/c .......Dr. Jose's Capital A/c .......Dr. To Goodwill A/c (Existing goodwill of ₹ 20,000 extend written off) |
12,000 8,000 - |
- - 20,000 |
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