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Need help with problem of Goodwill

Accounting Entries 349 views 1 replies

A and B are partners of AB & Co. sharing profits and losses in the ratio of 2:1 and C and D are partners of CD & Co. sharing profits and losses in the ratio of 3:2. On 1st April 2011, they decided to amalgamate and form a new firm M/s. AD & Co. wherein all the partners of both the firm would be partners sharing profits and losses in the ratio of 2:1:3:2 respectively to A,B,C and D.

 

Goodwill of AB & Co. was worth Rs. 75,000 and that of CD & Co. was worth Rs. 50,000. Goodwill account was not to be opened in the books of the new firm, the adjustments being recorded through capital accounts of the partners.

 

so Please help me with the problem and provide me the journal entry

Replies (1)

in your case after amalgamtion of two firms, goodwill is to be nullify by passing adjustment entry with partner's capital a/c's.

But in the proportion of their New profit and loss sharing ratio.

Goodwill A/c       Dr.    1,25,000

    To A Capital a/c                              31,250

    To B capital a/c                               15,625

    To C Capital a/c                              46,875

    To D capital a/c                               31,250


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