Question

Hemant and Nishant were partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs 1,60,000 and Rs 1,00,000 respectively. They admitted Somesh on 1st April, 2013 as new partner for 1/5th share in the future profits. Somesh brought Rs 1,20,000 as his capital. Calculate the value of goodwill of the firm and record necessary Journal entries for the above transactions on Somesh's admission.

Answer 1

Total capital (new) of the firm based on Somesh capital

= $1,20,000\times 5=\text{Rs}6,00,000$

Combined capital of Hemant, Nishant and Somesh

= $1,60,000+1,00,000+1,20,000$

= $\text{Rs}3,80,000$

Hidden goodwill of the firm = $6,00,000-3,80,000=\text{Rs}2,20,000$

Somesh's share of goodwill = $2,20,000\times \frac{1}{5}=\text{Rs}44,000$

JOURNAL
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ & \text{Bank/Cash A/c}& \text{Dr.}& & 1,20,000& \\ & \text{To Somesh's Capital A/c}& & & & 1,20,000\\ & \underset{–}{\text{(Being capital brought in cash by Somesh)}}& & & & \\ & \text{Somesh's Capital A/c}& \text{Dr.}& & 44,000& \\ & \text{To Hemant's Capital A/c}& & & & 26,400\\ & \text{To Nishant's Capital A/c}& & & & 17,600\\ & \text{(Being Somesh's share of goodwill credited to Hemant}& & & & \\ & \text{and Nishant in their sacrificing ratio i.e., 3 : 2)}& & & & \end{array}$