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

• A. (A), (B), and (D) only
• B. (A), (B), and (C) only
• C. (A), (B), (C), and (D)
• D. (B), (C), and (D) only

Answer 1

The Correct Option is C

When a new partner brings goodwill, the Gaining Partner’s Capital Account is debited, the Sacrificing Partner’s Capital Account is credited, and Premium for Goodwill Account is debited.
Hence, Option 3 is correct.