Question

Madan and Gopal are partners sharing profits in the ratio of 3 : 2. They admit Sooraj for 1/3rd share
in profits on 1st April, 2020. 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

A journal entry is a business transaction record in the entreprise's accounting books.

• The correct journal entries are -

a) Sooraj's Capital A/c  ( 4,50,000 x 1/3) 1,50,000,

To Mohan's Capital A/c ( 1,50,000 x 4/5)  1,20,000

To Gopal's Capital A/c ( 1,50,000 x 1/5)  30,000

( Being adjustment of goodwill not bought by partner)

b) Goodwill A/c Dr. 4,50,000,

To Madan's Capital A/c ( 4,50,000 x 3/5)  2,70,000

To Gopal's Capital A/c ( 4,50,000 x 2/5) 1,80,000

( Being goodwill raised in account books)

Madan's Capital A/c Dr   ( 4,50,000 x 1/3) 1,50,000,

Gopal's Capital A/c  ( 4,50,000 x 1/3) 1,50,000

Sooraj's Capital A/c  ( 4,50,000 x 1/3) 1,50,000,

To Goodwill A/c .4,50,000

( Being adjustment of goodwill not bought by partner)