Question

Madan and Gopal are partners sharing profits in the ratio of 3 : 2. They admit Sooraj for 1/3rd share in profits on 1st April, 2019. They also decide to share future profits equally. Goodwill of the firm was valued at ₹ 5,50,000. Goodwill existed in the books of account at ₹ 1,00,000,  which the partners decide to carry forward.
Sooraj is unable to bring his share of goodwill. Pass the necessary Journal entries on admission of Sooraj, if:
(a) Goodwill is not to be raised and written off; and
​(b) Goodwill is to be raised and written off.

Answer 1

Particulars	Madan	Gopal
Old Ratio	3/5	2/5
New Ratio	1/3	1/3
Gain/Sacrifice	(3/5 – 1/3)= 4/15 (Sacrifice)	(2/5 – 1/3)= 1/15 (Sacrifice)
Sacrificing Ratio	4:1

Case a) Goodwill is not be raised and written off:

In the books of the Madan, Gopal and Sooraj Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019
April 01	Sooraj’s Capital A/c (4,50,000 × 1/3)	Dr.		1,50,000
	To Madan’s Capital A/c (1,50,000× 4/5)				1,20,000
	To Gopal’s Capital A/c (1,50,000× 1/5)				30,000
	(Being adjustment for goodwill not brought by the partner)

Case b) Goodwill is to be raised and written off: 

In the books of the Madan, Gopal and Sooraj Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019	Goodwill A/c	Dr.		4,50,000
April 01	To Madan’s Capital A/c (4,50,000 × 3/5)				2,70,000
	To Gopal’s Capital A/c (4,50,000 × 2/5)				1,80,000
	(Being goodwill raised in the books of accounts)
2019
April 01	Sooraj’s Capital A/c (4,50,000 × 1/3)	Dr.		1,50,000
	Madan’s Capital A/c (4,50,000 × 1/3)			1,50,000
	Gopal’s Capital A/c (4,50,000 × 1/3)			1,50,000
	To Goodwill A/c				4,50,000
	(Being adjustment for goodwill not brought by the partner)