State the Journal entry when sacrificing partner Radha withdraws her Share of goodwill in cash? |
Radha's Capital A/c Dr. Bank A/c Dr Radha's Capital A/c Dr Premium for Goodwill A/c Dr |
Radha's Capital A/c Dr. |
The correct answer is Option (1)- When goodwill is withdrawn by the partners then their capital accounts are debited and bank/cash account is credited as bank/cash balance is reduced by that amount and their capital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- The amount of premium brought in by the new partner is shared by the existing partners in their ratio of sacrifice. If the amount is paid through the firm, the following journal entries are passed: (ii) Goodwill A/c If the partners decide to withdraw their amounts, (in full or in part) the following additional entry will be passed: |