Kamal and Rahul are partner rsquo s in a firm sharing profits and losses in the ratio of 7 3 They ad...........

General Accounting Principles Partnership

Kamal and Rahul are partner’s in a firm sharing profits and losses in the ratio of 7:3. They admit Kaushal as a partner for 1/5th share. Kaushal acquires his share from Kamal and Rahul in the ratio of 3:2. The goodwill of the firm has been valued at Rs.25000. Kaushal paid Rs.10000 privately to X and Y as his share of goodwill. What should be the journal entry

Rahul A/c Dr.

LoanA/c Dr.

To Cash A/c

Rahul A/c Dr.

Kamal A/c Dr.

To Kaushal A/c

Kamal A/c Dr.

Cash A/c Dr.

To Goodwill A/c

No entry will be passed

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Explanation:

No need to pass any journal entry when a new partner pays his premium for goodwill amount privately to the sacrificing partners, it will not be recorded in the books of accounts.