If goodwill already exists in the books of the firm at the time of admission of a partner then it will be dealt in the following manner.
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This question was previously asked in
Shift 01/06/2023 8:30 AM - 11:30 AM
A
Old Partner's Capital A/c - Dr; Goodwill A/c - Cr
B
New Partner's Capital A/c - Dr; Goodwill A/c - Cr
C
Gaining Partner's Capital A/c - Dr; Sacrificing Partner's Capital A/c - Cr
D
Sacrificing Partner's Capital A/c - DrGaining Partner's Capital A/c - Cr
Correct Answer
Old Partner's Capital A/c - Dr; Goodwill A/c - Cr
Detailed Explanation
1) Old Partner's Capital A/c - Dr; Goodwill A/c - Cr
This entry is used when the existing partners (old partners) are sacrificing a portion of their share of goodwill to accommodate the new partner. The goodwill account is credited because the sacrificing partners are reducing their claim on the goodwill.
So, the correct option is (1) Old Partner's Capital A/c - Dr;
Goodwill A/c - Cr.
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