Question : The journal entry for treatment of goodwill, when a new partner brings his share of goodwill in cash and one of the old partners gains, involves the following :
(A) Gaining Partner's Capital Account is debited
(B) Premium for Goodwill Account is debited
(C) Sacrificing Partner's Capital Account is credited
(D) Gaining Partner's Capital Account is credited
Choose the correct answer from the options given below:
Option 1: (A), (B) and (D) only
Option 2: (A), (B) and (C) only
Option 3: (A), (B), (C) and (D)
Option 4: (B), (C) and (D) only
Correct Answer: (A), (B) and (C) only
Solution : Following is the Journal Entry:
Premium for Goodwill A/c Dr.
Gaining Partner's Capital/Current A/c Dr.
To Sacrificing Partner's Capital/Current A/c
