Question

Madan and Gopal are partners sharing profits in the ratio of 3:2. They admit Sooraj for 1/3rd
in profits on 1st April, 2019. They also decide to share future profits equally. Goodwill of the firm was valued at 5,50,000. Goodwill existed in the books of account at ₹1,00,000, which the partners decide to carry forward.
Sooraj is unable to bring his share of goodwill. Pass the necessary Journal entries on admission of Sooraj, if:
(a) Goodwill is not to be raised and written off; and
(b) Goodwill is to be raised and written off.​​

Answer 1

Madan and Gopal are partners sharing profits in the ratio of 3:2. They admit Sooraj for 1/3rd

in profits on 1st April, 2019. They also decide to share future profits equally. Goodwill of the firm was valued at 5,50,000. Goodwill existed in the books of account at ₹1,00,000, which the partners decide to carry forward.

Sooraj is unable to bring his share of goodwill. Pass the necessary Journal entries on admission of Sooraj, if:

(a) Goodwill is not to be raised and written off; and

Particulars     Madan      Gopal

 Old ration        3/5        2/5

New Ration      1/3       1/3

Gain/Sacrifice    (3/5 - 1/3)  = 4/15      (2/5- 1/3) =  1/15

Sacrificing ration    4:1

Explanation: