Question

M,N and O are partners in a firm sharing profits in the ratio of 3:2:1. Goodwill of firm has been valued at Rs 60,000 on N’s retirement M and O agree to share future profits equally pass necessary journal entries for treatment of goodwill.

Answer 1

Answer:

Goodwill raised -:

Goodwill A/c. Dr 60000

To M's capital A/c. 30000

To N's capital A/c. 20000

To O's capital A/c. 10000

Explanation:

Goodwill written off -:

M's capital A/c. 45000

O's capital A/c 15000

To Goodwill A/c. 60000