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Question

M and J are partners in a firm sharing profits in the ratio of 3 : 2. They admit R as a new partner. The new profit-sharing ratio between M, J and R will be 5 : 3 : 2. R brought in ₹ 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Cash A/c

Dr.

25,000

To Premium for Goodwill A/c

25,000

(C brought his share of goodwill in cash)

Premium for Goodwill A/c

Dr.

25,000

To M’s Capital A/c

12,500

To J’s Capital A/c

12,500

(C’s share of Goodwill distributed in M and
J in their sacrificing Ratio)


Working Notes:

WN1

Calculating of Sacrificing Ratio

WN2

Distribution of R’s share of Goodwill-


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