Question

Saloni and Shrishti were partners in a firm sharing profits in the ratio of $7:3$. Their capitals were $Rs.2,00,000$ and $1,50,000$ respectively.They admitted Aditi on $1st$ April,$2013$ as a new partner for $\frac{1th}{6}$ share in future profits. Aditi brought $Rs.1,00,000$ as her capital.Calculate the value of goodwill of the firm and record necessary journal entries for the above transaction on Aditi's admission.

Answer 1

here, Aditi is entered into partnership for $\frac{1}{6th}$ share in future profits.She contributes $Rs.1,00,000$ towards her share of capital.
Taking Aditi's capital as the base, we can calculate the firm's capital as
Firm's Capital = New Partner's Capital $\times$ Reciprocal of her share
i.e $=1,00,000\times 6=Rs.6,00,000$
However ,the capital as that date is $Rs.4,50.000(i.e.2,00,000+1,50,000+1,00,000)$
So,the difference of $1,50,000$ is hidden goodwill.
Aditi's share in goodwill $+\frac{1}{6th}$ of $1,50,000=Rs.25,000$
The journal entries are as follows: