question_answer

X and Y were partners in a firm sharing profits and losses in the ratio of 3 : 5. Their fixed capitals were Rs. 2,00,000 and Rs. 3,00,000 respectively On 1st January, 2017, Z was admitted as a new partner for \[\frac{1}{4}th\] share in the profits. Z acquired his share of profit from Y. Z brought Rs. 2,00,000 as his capital which was to be kept fixed like the capitals of X and Y. Calculate the goodwill of the firm on Z's admission and the new profit sharing ratio of X, Y and Z. Also, pass necessary journal entry for the treatment of goodwill on Z's admission considering that Z did not bring his share of goodwill premium in cash.

Answer:

Hidden goodwill = Rs. 1,00,000