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Knowles, whose capital is R5 000, takes Carter into partnership. Carter has to pay a premium of R2 000 for goodwill and R5 000 as
Knowles, whose capital is R5 000, takes Carter into partnership. Carter has to pay a premium of R2 000 for goodwill and R5 000 as capital. Profits are to be shared pro rata to capital. Additional Information: 1. No goodwill account was opened in the books and Carter paid the premium to Knowles, directly. 2. No goodwill account was opened but the payment of the premium was recorded in the partnership books. Knowles withdrew the premium immediately after it was paid. 3. A goodwill account for R4 000 was opened, but this amount remained in the business. Carter increased his contribution to the business in order to retain the same ratio of profits as before. 4. A goodwill account for R4 000 was opened but no money was withdrawn from the business. Carter brought in only R7 000 Required By means of journal entries show these transactions in the books and state the ratio of profits in each of the above cases. Journal narrations are not required
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