Solution
Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for 1/4th share on 1st April, 2019. It was agreed that goodwill of the firm will be valued at 3 years’ purchase of the average profit of last 4 years ended 31st March, were Rs. 50,000 for 2015-16, Rs. 60,000 for 2016-17, Rs. 90,000 for 2017-18 and Rs. 70,000 for 2018-19. Ram did not bring his share of goodwill premium in cash. Record the necessary Journal entries in the books of the firm on Ram’s admission when: (a) Goodwill appears in the books at Rs. 2,02,500. (b) Goodwill appears in the books at Rs. 2,500. (c) Goodwill appears in the books at Rs. 2,05,000.