Question

A and B are partners sharing profits in the ratio of 3:2. They admit C into the firm for $\frac{1}{4}th$ share in profit which he takes $\frac{1}{6}th$ from A and $\frac{1}{12}th$ from B. C brings Rs 50,000 as goodwill . No goodwill account appears in the books of the firm. Pass necessary journal entries to record this arrangement.

Answer 1

JOURNAL

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Dr. (Rs)}& \text{(Cr.(Rs))}\\ & \text{Bank Account}Dr.& & 50,000& \\ & \text{To C's Capital A/c}& & & 50,000\\ & \text{(A part of his share of goodwill/premium brought in by C)}& & & \\ & \underset{–}{}& & & \\ & \text{Premium for Goodwill A/c}Dr.& & 50,000& \\ & \text{To A's Capital A/c}& & & 33,333\\ & \text{To B's Capital A/c}& & & 16,667\\ & \text{(Goodwill/premium credited to A and B in their}& & & \\ & \text{sacrificing ratio, i.e., 2 : 1)}& & & \end{array}$