Question

Ramesh and Sohan were partners in a firm. Their capitals were Rs. 40,000 and Rs. 60,000 respectively. They agreed to admit Aman as a partner for 1/4th share on the term that he brings Rs. 30,000 as capital and Rs. 40,000 as goodwill. Aman paid his capital money but in respect of goodwill he could bring only Rs. 24,000.

From the above information pass necessary journal entries and prepare Partners' Capital A/c and Aman's Current A/c.

Hint:

Sacrifice ratio = old share − new share; unpaid goodwill goes to the new partner's Current A/c, not Capital A/c.

Answer 1

Note: the question does not give the old profit-sharing ratio, so Ramesh and Sohan are taken to share profits equally.
Step 1: Verify the new ratio using an alternate route — add up the new shares directly:
Ramesh's new share = old share − sacrifice = 4/8 − 1/8 = 3/8; Sohan's new share = 4/8 − 1/8 = 3/8; Aman's share = 2/8. Sum = 3/8+3/8+2/8 = 8/8 = 1, confirming the shares are consistent.

Step 2: Treat the transaction as two separate cash receipts merged into one bank entry, then split them out for clarity:
Capital portion: Bank A/c Dr. 30,000, To Aman's Capital A/c 30,000.
Goodwill portion actually received: Bank A/c Dr. 24,000, To Premium for Goodwill A/c 24,000.
(These are shown as a single combined Bank Dr. of 54,000 in practice, but separating them here shows the logic clearly.)

Step 3: Handle the shortfall by treating Aman as still owing the firm:
Since Aman still owes Rs. 16,000 of goodwill, this is a personal debt he owes the firm — recorded by debiting HIS Current Account (not Capital, since Current Account is used for such running adjustments) and crediting Premium for Goodwill A/c with the same Rs. 16,000, so the goodwill account is fully populated at Rs. 40,000 either way.

Step 4: Distribute the full Rs. 40,000 goodwill to old partners by sacrifice, and cross-check the capital totals:
Ramesh's Capital: 40,000 (opening) + 20,000 (goodwill share) = Rs. 60,000.
Sohan's Capital: 60,000 (opening) + 20,000 (goodwill share) = Rs. 80,000.
Aman's Capital: Rs. 30,000 (capital only; his goodwill dues sit in his Current A/c, not Capital A/c).

Final Answer:
Ramesh's Capital = Rs. 60,000, Sohan's Capital = Rs. 80,000, Aman's Capital = Rs. 30,000, and Aman's Current Account carries a debit balance of \[ \boxed{Rs.\ 16{,}000} \], representing the goodwill he still owes the firm.