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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
X and Y are partners with capitals of ₹50,000 each. They admit Z as a partner for a 1/4th share in the profits. Z brings in ₹80,000 as his share of capital. The Profit & Loss Account showed a credit balance of ₹40,000 as on the date of admission. Give the necessary Journal entry to record the goodwill.
Total capital after Z’s admission = ₹50,000 + ₹50,000 + ₹40,000 (undistributed profit) + ₹80,000 = ₹2,20,000.
Capitalised value (based on Z’s share) = ₹80,000 × 4/1 = ₹3,20,000. Hidden Goodwill = ₹3,20,000 – ₹2,20,000 = ₹1,00,000; Z’s share = ₹1,00,000 × 1/4 = ₹25,000 (sacrificing ratio 1 : 1).
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Z’s Current A/c Dr. | 25,000 | |||
| To X’s Capital A/c | 12,500 | |||
| To Y’s Capital A/c | 12,500 | |||
| (Z’s share of hidden goodwill adjusted, credited to X and Y in 1 : 1) |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 4 Q.40 - Admission of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Admission of a Partner.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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