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.

Answer 1

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-