Hem and Nem are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Sam on Jan. 1, 2025 as a new partner for 1/5 share in the future profits. Sam brought Rs. 60,000 as his capital and does not bring his share of goodwill in cash. Choose the correct journal entry from the following:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Sam’s Current A/c Dr. 22,000; To Hem’s Capital A/c 13,200; To Nem’s Capital A/c 8,800
Sam brings only his capital, so his share of goodwill is hidden: it is worked out from the capital he brings for his share, charged to his current account (his capital stays at the cash he brought), and credited to the old partners in their sacrificing ratio.
Value of goodwill:
Total capital of the firm on Sam’s basis = Rs. 60,000 × 5/1 = Rs. 3,00,000
Actual capitals = Rs. 80,000 + Rs. 50,000 + Rs. 60,000 = Rs. 1,90,000
Goodwill of the firm = Rs. 3,00,000 − Rs. 1,90,000 = Rs. 1,10,000
Sam’s share = 1/5 × Rs. 1,10,000 = Rs. 22,000
Sharing it (no other ratio given, so Hem and Nem sacrifice in their old ratio 3:2):
Hem = Rs. 22,000 × 3/5 = Rs. 13,200
Nem = Rs. 22,000 × 2/5 = Rs. 8,800
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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