In case of admission of a partner, the new partner brings Rs. 20,000 only as his share of premium for goodwill out of Rs. 50,000. Journal entry for the adjustment of goodwill will be:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Premium for Goodwill A/c debited Rs. 20,000 and Incoming partners current A/c debited Rs. 30,000, sacrificing partners’ capital accounts credited Rs. 50,000
The new partner’s share of goodwill is Rs. 50,000, but he brings only Rs. 20,000 in cash. The old partners must still be credited with the full Rs. 50,000 in their sacrificing ratio. The cash part comes through Premium for Goodwill Account, and the part not brought in is debited to the new partner’s current account.
Premium for Goodwill A/c Dr. 20,000 (cash brought)
Incoming partner’s Current A/c Dr. 30,000 (Rs. 50,000 − Rs. 20,000 not brought)
To Sacrificing partners’ Capital A/cs 50,000
Debiting Goodwill Account instead would raise goodwill in the books, which is not done for goodwill not paid for.
NCERT (2026-27 edition): NCERT (2026-27 edition):
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