Question

Anu and Arul were partners in a firm sharing profits and losses in the ratio of 4 : 1. They have decided to admit Mano into the firm for 2/5 share of profits. The goodwill of the firm on the date of admission was valued at ₹ 25,000. Mano is not able to bring in cash for his share of goodwill. Pass necessary journal entry for goodwill on the assumption that the fluctuating capital method is followed.

Answer 1

Mano’s shares = `25,000 xx 2/5` = ₹ 10,000

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Mano's Capital A/c  ...Dr.		10,000	-
	To Anu's Capital A/c		-	8,000
	To Arul's Capital A/c		-	2,000
	(Mano's Share of goodwill credited to the old partners capital A/c in the sacrificing ratio)