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. Pas necessary Journal entries for the treatment of goodwill.


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Answer 1

Answer :

Old Ratio Of Partners - 3 : 2

Sacrificing Ratio - 3 : 2

Share Of Goodwill - 25,000

Required Journal Entries

• Cash ac Dr 25,000

To R's Capital ac. 25,000

( Amount brought in by R for his share of Goodwill )

• R's Capital ac Dr. 25,000

To M's Capital ac. 15,000

To J's Capital ac 10,000

( Goodwill Distributed among old partners in their Sacrificing Ratio )

Working Note :

Share Of Goodwill = 25,000

M's Share Of Goodwill = 25,000 × ⅗

= 15,000

J's Share Of Goodwill = 25,000 × ⅖

= 10,000