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Standard X

Mathematics

Basic Formulae

A and B are p...

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.

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Solution

Journal Entry

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

(Goodwill written-off between
A and B in the old ratio of 2:1)

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

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Journal Entry
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
	(Goodwill written-off between A and B in the old ratio of 2:1)