Q.18.Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3

Q.18. Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3. They admitted Ghosh as a new partner for 1/5 share of profits. Ghosh is to bring in Rs. 20,000 as capital and Rs. 4,000 as his share of goodwill premium. Give the necessary journal entries:

a) When the amount of goodwill is retained in the business.
b) When the amount of goodwill is fully withdrawn.
c) When 50% of the amount of goodwill is withdrawn.
d) When goodwill is paid privately.

SOLUTION

Journal Entries

S.No.	Particulars		L.F	Amount (Dr)	Amount (Cr)
(a)	Bank A/c	Dr.		24,000
	To Ghosh’s capital A/c				20,000
	To Premium for Goodwill A/c				4,000
	(Ghosh brought up his share of capital and goodwill)
	Premium for Goodwill A/c	Dr.		4,000
	To Verma’s capital A/c				2,500
	To Sharma’s capital				1,500
	(Goodwill brought by Ghosh credited to old partners sacrifice ratio)
(b)	Bank A/c	Dr.		24,000
	To Ghosh’s capital A/c				20,000
	To Primum for Goodwill A/c				4,000
	(Ghosh brought up his share of capital and goodwill)
	Premium for Goodwill A/c	Dr.		4,000
	To Verma’s capital A/c				2,500
	To Sharma’s capital				1,500
	(Goodwill brought by Ghosh credited to old partners sacrifice ratio)
	Verma’s capital A/c	Dr.		2,500
	Sharma’s capital	Dr.		1,500
	To Bank A/c				4,000
	(Premium for goodwill withdrawn by old partners in their sacrifice ratio)
(c)	Bank A/c	Dr.		24,000
	To Ghosh’s capital A/c				20,000
	To Primum for Goodwill A/c				4,000
	(Ghosh brought up his share of capital and goodwill)
	Premium for Goodwill A/c	Dr.		4,000
	To Verma’s capital A/c				2,500
	To Sharma’s capital				1,500
	(Goodwill brought by Ghosh credited to old partners sacrifice ratio)
	Verma’s capital A/c	Dr.		1,250
	Sharma’s capital	Dr.		750
	To Bank A/c				2,000
	(Half of Premium for goodwill withdrawn by old partners in their sacrifice ratio)
(d)	if goodwill not brought in the firm their is no journal entry

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