Multiple choice

Vikas and Rahul are partners who shares profits in the ratio of 2:3. They admitted Sunil a share in future profits who brings 37,500 as his share of Goodwill. Half of which is withdrawn by sacrificing partners. Record journal entry for goodwill withdrawn by partners.

  1. Premium for Goodwill A/c Dr 37,500 To Vikas'a Capital A/ 15,000 To Rahul's Capital A/ 22,500

  2. Vikas's Capital A Dr. 7,500 Rahul's Capital A/c Dr 11,250 To Bank A/c 18,750

  3. Bank A/c Dr 18,750 To Vikas's Capital A/c 7,500 To Rahul's Capital A/c 11,250

  4. Vikas capital A/c Dr 15,000 Rahul's Capital A/c Dr 22,500 To Bank 37,500
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B Correct answer
Explanation

Half of the goodwill, Rs. 37500/2 = Rs. 18750, is withdrawn from the business. It is borne in the sacrificing ratio 2:3, giving Rs. 7500 for Vikas and Rs. 11250 for Rahul, so both capital accounts are debited and Bank is credited.

AI explanation

The total goodwill of 37,500 is distributed between Vikas and Rahul in their profit sharing ratio of 2:3, making their shares 15,000 and 22,500 respectively. Since only half of the goodwill is withdrawn by the sacrificing partners, the total amount withdrawn is 18,750, which is debited from their capital accounts in the same ratio. This results in debiting 7,500 from Vikas's Capital A/c and 11,250 from Rahul's Capital A/c, with the total of 18,750 credited to Bank A/c.

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