Question

Satyam and Shivam are partner sharing profits in the ratio of 2:1. They admitted Sundaram as a new partner for 1/5 share of profits. Sundaram bring Rs. 5,00,000 as Capital and 90,000 as Premium for Goodwill. Half of the Premium is withdrawn by old partner. There were a Dr. Balance in Profit and loss Rs. 30,000.
Pass necessary journal entries.
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Answer 1

Answer:

(i) Calculation of goodwill of the firm:

Total capital of the firm after admission= 50000+75000+75000

                                                                = 200000

Total capital of the firm based on Atul's capital= 75000 * 4/1

                                                                            = 300000

Hidden Goodwill= 300000- 200000= 100000

Atul's share of goodwill= 100000 * 1/4= 25000

(ii)                                      JOURNAL

1. Cash a/c.....                                              Dr.                   75000

         To Atul's Capital a/c                                                           75000

(Being capital brought in by Atul)

2. Atul's Current a/c....                               Dr.                      25000

          To Bhuwan's Capital a/c                                                      15000

           To Shivam's Capital a/c                                                       10000

(Being goodwill distributed among the partners in the ratio of 3:2)

Explanation:

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