Question

Amar and Samar were partners in a firm sharing profits and losses in 3:1 ratio. They admitted Kanwar for 1/4 share of profits. Kanwar could not bring his share of goodwill premium in cash. The Goodwill of the firm was valued at Rs. 80,000 on Kanwar’s admission. Record necessary journal entry for goodwill on Kanwar’s admission.

Answer 1

	Amar	:	Samar
Old Ratio	3	:	1

Kanwar admitted for 1/4 share of profit.

Journal Entries
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Kanwar's Capital A/c		Dr.		20,000
	To Amar's Capital A/c					15,000
	To Samar's Capital A/c					5,000
	(Kanwar's share of goodwill charged from his capital account by Amar and Kanwar in sacrificing ratio)

New Firm’s Goodwill = Rs 80,000

Kanwar’s Share of Goodwill = 80,000 × (1/4) = 20,000

Kanwar’s Goodwill will be taken by Amar and Samar in their sacrificing ratio here. Sacrificing Ratio will be equal to old ratio because new and sacrificing ratio is not given,

if sacrificing and new ratio is not given it is assumed that old partners sacrificed in their old ratio.