Question

P and Q are partners with capitals of 52000 and 44000 respectively. They admit R as a partner with 1/4th share in the profits of the firm. R brings 52000 as his share of capital. Give journal entry to record goodwill on R’s admission​

Answer 1

Answer:

P's Capital A/c Dr. 26,000

Q's Capital A/d Dr. 26,000

    To R's Capital 52,000

Explanation:

Answer 2

Explanation:

Working Note:

Calculation of hidden goodwill:

Total Capital of the firm after admission= 50000+50000+80000+40000

= 220000

Total capital of the firm based on Z's capital= 80000 * 4/1

= 320000

Hidden goodwill= 320000-220000= 100000

Z's share of Goodwill= 100000 * 1/4= 25000

JOURNAL

1. Cash a/c..... Dr. 80000

To Z's Capital a/c 80000

(Being capital brought in by Z)

2. Z's Capital a/c... Dr. 25000

To X's Capital a/c 12500

To Y's Capital a/c 12500