Question

A and B are partners sharing profit and losses in the ratio 3:2. They admit C as new partner for 1/5 share in profit. The goodwill is valued at rs 25000. C bring in the necessary amount of premium. Pass the necessary journal entries on the assumption that the premium brought in by C is retained in business

Answer 1

Answer:

C's share of goodwill = 1/5 × 25000 = 5000

Journal entry ...

• Cash a/c Dr 5000

To premium for g/w a/c 5000

(being share of goodwill brought by C)

• Premium for g/w a/c Dr 5000

__To A's capital a/c 3000

__ To B's capital a/c 2000

(being premium paid to A and B)

hope it helps..