Question

Rahul and Nikhil are partners in a firm. They admit Tanvi for `1/5`th share. On the date of her admission, the firm’s book shows the following balances:

Rahul’s Capital: ₹ 2,80,000

Nikhil’s Capital: ₹ 2,20,000

Tanvi contributes 20% of the adjusted capital of Rahul and Nikhil. She also contributes ₹ 20,000 as half of her share of goodwill.

Pass the journal entry to record the capital contribution made by Tanvi.

Answer 1

Adjusted capital of Rahul and Nikhil = 2,80,000 + 2,20,000

= 5,00,000

Tanvi’s Capital = 5,00,000 × 20%

= 1,00,000

Tanvi contributes ₹ 20,000 as half of her share of goodwill.

Total cash brought in = Capital + Goodwill

= 1,00,000 + 20,000

= 1,20,000

Journal Entry:

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Cash/Bank A/c   ...Dr.		1,20,000	-
	To Tanvi’s Capital A/c		-	1,00,000
	To Premium for Goodwill A/c		-	20,000