Question

Dim and bright are partners sharing profits in the ratio of 2:3. On 1 April 2019, they admit Abel as

partner for 1/4" share in profits. Abel brought Rs 100000 as his capital and Rs 36000as premium for
goodwill for his 1/4" share in the profits. New profit sharing ratio of dim, bright and Abel is agreed to
be 3:3:2. Dim and bright withdraw the premium for goodwill. Pass necessary journal entries?

Answer 1

To pass the necessary journal entries for the admission of Abel as a partner and the withdrawal of the premium for goodwill, we need to record the financial transactions. The journal entries are as follows: 1) Admission of Abel: Debit: Abel's Capital a/c, Credit: A's Capital a/c, Credit: B's Capital a/c. 2) Abel's Premium for Goodwill: Debit: G's Capital a/c, Credit: Abel's Capital a/c. 3) Withdrawal of Premium for Goodwill: Debit: A's Capital a/c, Debit: B's Capital a/c, Credit: G's Capital a/c.

Step-by-step explanation:

Journal entries are used to record the financial transactions of a business. In this case, we need to pass the necessary journal entries for the admission of Abel as a partner and the withdrawal of the premium for goodwill.

Journal Entry 1: Admission of Abel as a Partner

A = Dim's Capital a/c
B = Bright's Capital a/c
C = Abel's Capital a/c

Debit: Abel's Capital a/c (1/4 x 100,000) = Rs 25,000

Credit: A's Capital a/c (2/5 x 100,000) = Rs 40,000

Credit: B's Capital a/c (3/5 x 100,000) = Rs 60,000

Journal Entry 2: Abel's Premium for Goodwill

A = Dim's Capital a/c
B = Bright's Capital a/c
G = Goodwill a/c

Debit: G's Capital a/c = Rs 36,000

Credit: Abel's Capital a/c = Rs 36,000

Journal Entry 3: Withdrawal of Premium for Goodwill

G = Goodwill a/c
A = Dim's Capital a/c
B = Bright's Capital a/c

Debit: A's Capital a/c = Rs 12,000

Debit: B's Capital a/c = Rs 24,000

Credit: G's Capital a/c = Rs 36,000