Journal Entries for Admission of Partner and Treatment of Goodwill

(A) When the amount of goodwill is retained in the business:

1. Ghosh's capital account is credited with Rs 20,000 and goodwill account is debited with Rs 4,000.
2. The new profit-sharing ratio of Verma, Sharma, and Ghosh is 5:3:1.
3. The old partners' capital accounts are adjusted by transferring the amount of goodwill to their capital accounts in the old ratio of 5:3.
4. The remaining balance of goodwill is transferred to the newly created goodwill account.

(B) When the amount of goodwill is fully withdrawn:

1. The balance in the goodwill account is transferred to Verma and Sharma's capital accounts in the old ratio of 5:3.
2. Ghosh's capital account is debited with his share of the balance in the goodwill account.
3. The total amount of the goodwill premium is written off by debiting the profit and loss account and crediting the goodwill account.

(C) When 50% of the amount of goodwill is withdrawn:

1. Half of the balance in the goodwill account is transferred to Verma and Sharma's capital accounts in the old ratio of 5:3.
2. Ghosh's capital account is debited with his share of half of the balance in the goodwill account.
3. The remaining balance in the goodwill account is transferred to the newly created goodwill account.

(D) When goodwill is paid privately:

1. Ghosh's capital account is debited with his share of the goodwill premium.
2. Verma and Sharma's capital accounts are credited in the old ratio of 5:3.
3. The profit and loss account is debited with the full amount of the goodwill premium, and the goodwill account is credited.

Explanation:

Goodwill is an intangible asset that arises when a business is sold or when a new partner is admitted to the partnership. In this case, Ghosh is admitted as a new partner, and he is bringing in capital and paying a share of the goodwill premium. The treatment of goodwill depends on whether it is retained in the business or withdrawn.

If the goodwill is retained in the business, it is recorded in a goodwill account. The old partners' capital accounts are adjusted by transferring the amount of goodwill to their capital accounts in the old ratio, and the remaining balance of goodwill is transferred to the newly created goodwill account.

If the goodwill is fully withdrawn, the balance in the goodwill account is transferred to the old partners' capital accounts, and Ghosh's capital account is debited with his share of the balance in the goodwill account. The total amount of the goodwill premium is written off by debiting the profit and loss account and crediting the goodwill account.

If 50% of the goodwill is withdrawn, half of the balance in the goodwill account is transferred to the old partners' capital accounts, and Ghosh's capital account is debited with his share of half of the balance in the goodwill account. The remaining balance in the goodwill account is transferred to the newly created goodwill account.

If the goodwill is paid privately, Ghosh's capital account is debited with his share of the goodwill premium, and the old partners' capital accounts are credited in the old ratio. The profit and loss account is debited with the full amount of the goodwill premium, and the goodwill account is credited.