If New Partner Brings Goodwill into the business by way of Cash... which of the following journal entry is correct --->
Cash/Bank A/c Dr
To Goodwill A/c
OR
Cash/Bank A/c Dr
To New Partners Capital A/c
Anyone sir... please clarify..... its urgent
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Treatment of goodwill
Replies (16)
CASH/BANK A/C DR.
TO GOODWILL A/C
BECAUSE GOODWILL CAN'T BE CONSIDER AS CAPITAL.
cash/bank a/c dr
to goodwill
It's is possible that new partner take consolidated capital and there after transfer it as goodwill.
It depends of whether partners want to show goodwill in books or not.
If they want to show goodwill
Cash a/c Dr
To new partner a/c
goodwill a/c Dr
to old partner's capital a/c(sacrificing ratio)
If they don't want to show goodwill
cash a/c Dr
to new partner's capital a/c
new partner's capital a/c Dr
To old partner's capital a/c (sacrificing racio)
dear khatri
in ur reply u had given
if goodwill is to show in a/cs'
then how the new partner a/c will be debited against his goodwill contribution
is any additional journal entry is required... pl.clarify
plz reply fastttttttttt
cash or bank a/c...dr
to goodwill..
then..goodwill a/c...dr
to old partners in sacrificin ratio
I will reply to tomorrow on this matter...
cash dr
to gw
if ques is silent, it will be treated as brought seperately.
Bank A/c Dr
To goodwill A/c
Goodwill will show is B/S. If you don't want to show goodwill in B/s, then
Bank A/c. Dr
to Patner's Capital A/c.
Goodwill cannot be recognised in books of accounts unless it is purchased one.
entry...
1.cash to incoming partner(with goodwill amount)
2. Incoming partner to old partners ( wit h amount of goodwill in sacrificing ratio)
Cash A/c ....dr
To Goodwill a/c
is the correct entry...
I am giving below the link where you can find the full treatment of goodwill on admision of a partner.
https://www.jbsclasses.com/187/journal-for-treatment-of-goodwill
If a new partner does not bring goodwill in cash then
goodwill a/c dr
To old partner's capital a/c (in sacrificing ratio)
If a new partner brings cash as goodwill
cash a/c dr
To New Partner a/c
New partner a/c Dr
to old partner capital a/c (in sacrificing ratio)
(I have done some mistake in first reply.)
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