JAMB - Accounts Principles Of Accounts (2018 - No. 9)

When goodwill is not retained in the business, the entries in the new partners books will be to debit______________

Goodwill account and credit partners capital account

Cash account and credit goodwill account

Goodwill account and credit cash account

Partners capital account and credit goodwill account

When goodwill is raised in the books at full value, the entry is

Dr Goodwill Account

Cr Old partners capital account (old ratio)

When the raised goodwill is written off, entry will be:

Dr All partners capital account

Cr Goodwill accounts

Note: goodwill written off includes new partners in the new profit sharing ratio