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Home Questions CDU578Q4T8
Target Exam

CUET

Subject

Accountancy

Chapter

Admission of a Partner

Question:

State the Journal entry when sacrificing partner Radha withdraws her Share of goodwill in cash?

Options:

Radha's Capital A/c Dr.
     To Cash A/c

Bank A/c Dr
   To Radha's Capital A/c

Radha's Capital A/c Dr
    To Goodwill A/c

Premium for Goodwill A/c Dr
    To Radha's capital A/c

Correct Answer:

Radha's Capital A/c Dr.
     To Cash A/c

Explanation:

The correct answer is Option (1)-
Radha's Capital A/c Dr.
            To Cash A/c

When goodwill is withdrawn by the partners then their capital accounts are debited and bank/cash account is credited as bank/cash balance is reduced by that amount and their capital balance also. So, journal entry will be-
Partner's capital A/c
    To Bank/Cash A/c

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