Question

A and B are partners sharing profits in the ratio of 3 : 2. Their books show goodwill at ₹ 2,000. C is admitted as partner for 1/4th share of profits and brings in ₹ 10,000 as his capital but is not able to bring in cash for his share of goodwill ₹ 3,000. Draft Journal entries.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	A’s Capital A/c	Dr.		1,200
	B’s Capital A/c	Dr.		800
	To Goodwill A/c				2,000
	(Goodwill written-off at the time of C’s admission)
	Cash A/c	Dr.		10,000
	To C’s Capital A/c				10,000
	(Capital brought by C)
	C’s Capital A/c	Dr.		3,000
	To A’s Capital A/c				1,800
	To B’s Capital A/c				1,200
	(C’s share of capital charged from his capital distributed between A and B in their sacrificing ratio)

Working Notes:
Writing off of goodwill already in the books (JE 1)
A's Account will be debited with = 3000 x `3/5` = 1,200

B's Account will be debited with = 3000 x `2/5` = 800