Geeta, Sunita and Anita were partners in a firm sharing profits in the ratio of the 5: 3: 2. On 1-1-2015 they admitted Yogita as a new partner Account for 1 / 10th share in the profit was showing a debit balance of Rs. 20,000 which was credited by the accountant of the firm to the capital accounts of Geeta, Sunita and Anita in their profit-sharing ratio. Did the accountant give correct treatment? Give reason in support of your answer.

SOLUTION

No, the accountant was not correct non-purchased goodwill cannot be shown in the books.