A and B are partners sharing profits in the ratio of 3 : 2. Their books show goodwill at ₹ 2,000. C is admitted as partner for 1/4th share of profits and brings in ₹ 10,000 as his capital but is not able to bring in cash for his share of goodwill ₹ 3,000. Draft Journal entries.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

A’s Capital A/c

Dr.

1,200

B’s Capital A/c

Dr.

800

To Goodwill A/c

2,000

(Goodwill written-off at the time of
C’s admission)

Cash A/c

Dr.

10,000

To C’s Capital A/c

10,000

(Capital brought by C)

C’s Capital A/c

Dr.

3,000

To A’s Capital A/c

1,800

To B’s Capital A/c

1,200

(C’s share of capital charged from his capital distributed between A and B in their sacrificing ratio)

Working Notes:

Writing off of goodwill already in the books (JE 1)

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R s . 2, 000

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Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	A’s Capital A/c	Dr.		1,200
	B’s Capital A/c	Dr.		800
	To Goodwill A/c				2,000
	(Goodwill written-off at the time of C’s admission)

	Cash A/c	Dr.		10,000
	To C’s Capital A/c				10,000
	(Capital brought by C)

	C’s Capital A/c	Dr.		3,000
	To A’s Capital A/c				1,800
	To B’s Capital A/c				1,200
	(C’s share of capital charged from his capital distributed between A and B in their sacrificing ratio)