Tanisha and Tanishka are partner with 3:1 admitted manju as a new part...
Journal Entry for Admission of Manju as a Partner
Initial Investment by Manju:
- Manju brought ₹42,500 in cash
- Manju brought furniture worth ₹59,500
Calculation of Total Investment by Manju:
- Total investment by Manju = Cash brought + Value of furniture
- Total investment by Manju = ₹42,500 + ₹59,500
- Total investment by Manju = ₹1,02,000
Manju's Share of Premium for Goodwill:
- Manju is admitted for a 1/3rd share in the partnership
- Total premium for goodwill = Total investment by Manju
- Manju's share of premium for goodwill = 1/3 * Total investment by Manju
- Manju's share of premium for goodwill = 1/3 * ₹1,02,000
- Manju's share of premium for goodwill = ₹34,000
Journal Entry:
- Manju's Capital A/c Dr. ₹1,02,000
- To Cash A/c ₹42,500
- To Furniture A/c ₹59,500
- To Goodwill A/c ₹34,000
Explanation:
- Manju's capital account is debited with the total investment made by him (cash + furniture).
- Cash and furniture accounts are credited as Manju brought them into the business.
- Goodwill account is credited with Manju's share of the premium for goodwill.
- This journal entry reflects the admission of Manju as a new partner and the allocation of his investment and goodwill premium in the partnership accounts.
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