Question

X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership
with 1/5th share in profits which he acquires equally from A and Y. Z brings in ₹40,000 as
goodwill in cash. Goodwill amount will be credited to :

Answer 1

Answer:

Journal entry for the transaction is:

Gaining partner's capital A/c. Dr.

To Sacrificing partner's capital A/c

So, Here when we calculate the sacrifice of old partners X and Y, we will get the answer as:

Sacrificing ratio = old share - new share

X = 3/5 - 1/2 = 1/10(sacrifice)

Y = 2/5 - 1/2 = -1/10(gain)

So, as Y is the gaining partner his account will be debited.

So, the goodwill Amount is credited to X's capital A/c by 20,000(as the amount of goodwill will be distributed among the partners in their sacrificing ratio i.e., 1 : 1)

And the Journal Entry will be:

Y's capital A/c Dr. 20,000

Y's capital A/c Dr. 20,000 To X's capital A/c. 20,000

Hope it helps