Based on following, answer the question.
Amrita and Kalyani are partners sharing profits in the ratio of 3:2. They decided to expand the business by admitting Suraj as new partner for 1/4th share. Suraj's share of goodwill is valued at ₹90,000 for which he compensated Amrita and Kalyani in the ratio of 1:4. Following information is also provided:
| Particulars | Book value (₹) | Revalued figure (₹) |
| Machinery | 25,00,000 | 27,00,000 |
| Land | 10,00,000 | 50,00,000 |
| Computers | 2,50,000 | 50,000 |
Workmen Compensation Fund ₹5,00,000. Claim against workmen compensation is ₹2,00,000 and goodwill appeared in the books at ₹60,000.
What journal entry will be passed for goodwill appearing in the books?
Answer & explanation
Correct answer: option 2
The correct answer is option 2-
Amrita's Capital A/c Dr. ₹36,000
Kalyani's Capital A/c Dr. ₹24,000
To Goodwill A/c ₹60,000
Goodwill appeared in books at ₹60,000.
This will be written off between old partners in old ratio. So, old partner's Capital a/c is debited and goodwill is credited.
Amrita share = 60,000 x 3/5
= ₹36,000
Kalyani share = 60,000 x 2/5
= ₹24,000
Journal entry will be-
Amrita's Capital A/c Dr. ₹36,000
Kalyani's Capital A/c Dr. ₹24,000
To Goodwill A/c ₹60,000