Question

Ned partnership firm bought Ted firm for a consideration. The transaction involved some goodwill being purchase of 720,000. Ned has two partners Sily and Lily sharing the profits/losses equally. Give the entry to remove goodwill from the banks.​

Answer 1

Answer:

silly capital a/c dr. 20,000

Lilly capital a/c dr. 20,000

TO goodwill a/c 20,000

Answer 2

Answer:

Journal entry for  Goodwill purchased:

Goodwill A/c----------------Dr.                    720000

               To Bank A/c                                            720000

(Being goodwill purchases through cash)

Journal entry for goodwill withdrawal:

Silly A/c----------------------Dr                    360000

Lily A/c-----------------------Dr                    360000

        To Goodwill A/c                                           720000

(Being purchased goodwill distributed equally)

• Goodwill is an intangible asset, after the goodwill is purchase with cash and distributed to the partners, balance of goodwill will become zero.