Question

Disha and Divya are partners in a firm sharing profits in the ratio of $3:2$ respectively. The fixed capital of Disha is $Rs.4,80,000$ and of Divya is $Rs.3,00,000$. On $1^{st}$April,2018 they admitted Hina as a new partner for $1/5^{th}$ share in future profit. Hina brought $Rs.3,00,000$ as her capital. Calculate value of goodwill of the firm and record necessary Journal entries on Hina's admission.

Answer 1

(i) Calculation of Goodwill:

Total capital of the firm after admission= 480000+300000+300000

= 1080000

Total capital of the firm based on Hina's capital= 300000 * 5/1

= 1500000

Hidden Goodwill= 1500000-1080000

= 420000

Therefore, Hina's share= 420000 * 1/5= 84000

(ii) JOURNAL

1. Cash a/c.... Dr. 300000

To Hina's Capital a/c 300000

(Being capital brought in by Hina)

2. Hina's Current a/c... Dr. 84000

To Disha's Current a/c 50400

To Divya's Current a/c 33600

(Being Hina's share of goodwill adjusted through the current accounts)