Question

Harish and Munish are partners in a firm sharing profits and losses in the ratio of 3:2. Rakesh is admitted into partnership for 1/3 share in profits. He brings in Rs. 50,000 as capital, but not in a position to bring any amount for his share of goodwill which has been valued at Rs. 15,000. Give necessary journal entry for recording goodwill, when there is no goodwill appearing in the books of the firm.

• A.

  Date	Particulars	L.F.	Dr. Amount	Cr. Amount
  	Rakesh's Capital A/c Dr.		15,000
  	To Harish's Capital A/c			9,000
  	To Munish's Capital A/c			6,000

• B.

  Date	Particulars	L.F.	Dr. Amount	Cr. Amount
  	Rakesh's Current A/c Dr.		15,000
  	To Harish's Capital A/c			9,000
  	To Munish's Capital A/c			6,000

• C.

  Date	Particulars	L.F.	Dr. Amount	Cr. Amount
  	Bank A/c Dr.		65,000
  	To Rakesh's Capital A/c			50,000
  	To Premium for Goodwill A/c			15,000

• D.

  Date	Particulars	L.F.	Dr. Amount	Cr. Amount
  	Bank A/c Dr.		50,000
  	Rakesh's Current A/c Dr.		15,000
  	To Rakesh's Capital A/c			65,000

Hint:

Rakesh brings no goodwill, so his Current A/c is debited with 15,000. The old partners are credited in the sacrificing ratio 3:2.

Answer 1

The Correct Option is B

Step 1: List what has to be recorded.
Goodwill of Rs 15,000 has to be paid for by Rakesh. He has no cash for it. So a debit must be raised against him, and credit must go to the old partners who give up their share.

Step 2: Decide who gets the credit.
The credit goes to the old partners in the ratio in which they give up their profit. Harish gives up $\frac{1}{5}$ and Munish gives up $\frac{2}{15}$, which is 3:2. So Rs 15,000 is split as Rs 9,000 and Rs 6,000.

Step 3: Decide which account of Rakesh is debited.
His cash capital of Rs 50,000 is already fixed for the firm. So his goodwill dues are put in his Current Account. This keeps the agreed capital untouched.

Step 4: Write the entry.
Rakesh's Current A/c Dr. Rs 15,000
To Harish's Capital A/c Rs 9,000
To Munish's Capital A/c Rs 6,000

Step 5: Compare with the four options.
Option 1 uses his Capital A/c, so it is not right. Option 3 shows a Bank receipt of Rs 65,000 and a Premium account, but he brings only Rs 50,000. Option 4 credits Rakesh himself, which is wrong. Only option 2 matches.
\[ \boxed{\text{Option 2}} \]

Final Answer:
Option 2 gives the correct journal entry.