OF GOODWILL Particulars Dute L.F. Credit Cash Ale Debit Rs. 1.70,000 Rs. 11 2010 1.20,000 50,000 Dr To C's Capital Alc To Premium A/c (Goodwill) (Being cash brought in by C for his share of capital and goodwill) Premium Alc (Goodwill) Dr. To A's Capital Alc To B's Capital A/C (Being amount of goodwill distributed among A and B in sacrificing ratio) $12.2010 50.000 25.000 25.000 KO ILLUSTRATION 48 (Preparation of Balance Sheet to reconstituted firm - Adjustment of Capitals). A and B are partners in a firm sharing profits and losses in the ratio of 3: 2 They admit C into the firm when their Balance Sheet was as follows: BALANCE SHEET as at 31.3.2010 Liabilities Rs. Assets Rs. Creditors 20.000 Bank 40,000 Bank Loan 40.000 Debtors 35,000 General Reserve 30,000 Stock 50,000 80.000 Investments 40,000 50.000 Furniture 20.000 Machinery 25,000 Goodwill 10.000 2.20.000 2.20.000 As Capital B's Capital (a) C will bring Rs.70,000 as his share of capital. Terms of C's admission were as follows: (b) Goodwill is valued at Rs.60,000 and C could not bring his share of goodwill in cash. It was decided not to show goodwill in the books. (c) Furniture and Machinery is to be revalued at Rs. 15,000 and Rs.35,000 respectively. (d) Capital of old partners is to be re-adjusted on the basis of new partner's capital le) New ratio of A, B and C is 3:2:1 Adjustment of capital is to be made through bank. Give Revaluation Account, Partners. Capital Accounts, Balance Sheet of the new firm necessary journal entries. ind So akes of A, B and C