X and Y are Partners sharing 3:2. They decided to share in future 1:1. On that date Profit and Loss (Credit balance) shown Rs. 80,000. Pass entry.
Answers
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
(Being Z's share of goodwill distributed among the partners in the ratio of 1:1)
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Answer:
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
(Being Z's share of goodwill distributed among the partners in the ratio of 1:1)
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