Hem and Nem are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Sam on Jan. 1, 2025 as a new partner for 1/5 share in the future profits. Sam brought Rs. 60,000 as his capital and does not bring his share of goodwill in cash. Choose the correct journal entry from the following:

Sam's Current A/c Dr. 22,000
To Hem's Capital A/c 13,200
To Nem's Capital A/c 8,800

Correct answer: Option (2) → Sam's Current A/c Dr. 22,000; To Hem's Capital A/c 13,200; To Nem's Capital A/c 8,800

Concept: Hidden (inferred) goodwill when the incoming partner does not bring goodwill in cash, per Reconstitution of a Partnership Firm – Admission of a Partner.

Combined capital = Hem 80,000 + Nem 50,000 + Sam 60,000 = Rs. 1,90,000
Sam’s 1/5 share ⇒ implied total capital of firm = 60,000 × 5 = Rs. 3,00,000
Hidden goodwill = 3,00,000 – 1,90,000 = Rs. 1,10,000
Sam’s share of goodwill = 1,10,000 × 1/5 = Rs. 22,000
As Sam brings no cash for goodwill, his Current A/c is debited and the old partners are credited in the sacrificing (old 3 : 2) ratio: Hem 22,000 × 3/5 = 13,200; Nem 22,000 × 2/5 = 8,800.