Question

E and F were partners in a firm sharing profits in the ratio of 3 : 1 . They admitted G as a new partner on 1st April, 2018 for 1/3rd share. It was decided that E, F and G will share future profits equally . G brought ₹ 50,000 in cash and machinery worth ₹ 70,000 for his share of profit as premium of goodwill. Pass necessary journal entries in the books of the firm.

Answer 1

Journal
Date 2018	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
April 1	Cash A/c	Dr.		50,000
	Machinery A/c	Dr.		70,000
	To Premium for Goodwill A/c				1,20,000
	(G brought cash Rs 50,000 and Machinery Rs 70,000 for his share of Goodwill)
April 1	Premium for Goodwill A/c	Dr.		1,20,000
	To E’s Capital A/c				1,20,000
	(G share of goodwill transferred to E’s Capital Account)
April 1	F’s Capital A/c	Dr.		30,000
	To E’s Capital A/c				30,000
	(F’s share of gain in goodwill charged from his capital and transferred to E’s capital)

Working Notes:

WN1

WN2

Calculation of F’s share of gain in goodwill

G’s share of Goodwill = 50,000 + 70,000 = Rs 1, 20,000

Goodwill of the firm on the basis of G’s share

F’s share of gain in goodwill