Practicing Success
Practicing Success
CUET Preparation Today
| When a new partner pays for Goodwill in cash, Where the amount should be Debited in Firm's Book? |
Cash Account Goodwill account Capital account All of above |
| Cash Account |
| Premium for goodwill is the additional amount brought in by the incoming partner to compensate for the loss in share of the super profits of the old partners. This extra amount is credited to the premium for goodwill account and is distributed among the old partners in their sacrificing ratio. The accounting entry is: 1. Cash a/c.... Dr. To Premium for Goodwill a/c (Being premium for goodwill brought in by the new partner) |
