A, B and C are partners sharing profit in the ratio of 5:6:4 . A new partner D is to be admitted after which the future profit will be shares in the ratio 5:3:3:3. Goodwill is valued at $30000. Prepare the journal entries regarding: Creation of goodwill Elimination of good will Contribution made by existing partners to the retired partner.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
A, B and C are partners sharing profit in the ratio of 5:6:4 . A new partner D is to be admitted after which the future profit will be shares in the ratio 5:3:3:3.
Prepare the
- Creation of goodwill
- Elimination of good will
- Contribution made by existing partners to the retired partner.
Step by step
Solved in 2 steps
