Question

X and Y are partners in a firm sharing profits in the ratio of 3 : 2 . On 1st April, 2018, they admit Z as a new partner for 1/4th share in the profits . Z contributed following assets towards his capital and for his share of goodwill:
Stock ₹ 60,000 ; Debtors ₹ 80,000; Land ₹ 1,00,000 , Plant and Machinery ₹ 40,000. On the date of admission of Z , the goodwill of the firm was valued at ₹ 6,00,000.
Pass necessary journal entries in the books of the firm on Z's admission.

Answer 1

Journal
Date 2018	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
April 1	Stock A/c	Dr.		60,000
	Debtors A/c	Dr.		80,000
	Land A/c	Dr.		1,00,000
	Plant and Machinery A/c	Dr.		40,000
	To Z’s Capital A/c				1,30,000
	To Premium for Goodwill A/c				1,50,000
	(Z brought assets for his share of goodwill and Capital)
April 1	Premium for Goodwill A/c	Dr.		1,50,000
	To X’s Capital A/c				90,000
	To Y’s Capital A/c				60,000
	(Z’s share of Goodwill distributed between X and Y in sacrificing ratio)

Working Notes:

WN1

WN2

Distribution of Z’s Goodwill