Ngozi and Musa with a capital of #30,000 each decide to admit Mary into the
FINANCIAL
JAMB 2012
Ngozi and Musa with a capital of #30,000 each decide to admit Mary into the partnership business with a capital of #20,000 and goodwill #15,000.If the profits and losses are to be shared equally, the journal entries to record goodwill are
- A. debit goodwill #15,000, cash #20,000 and credit Mary's capital #35,000
- B. credit goodwill #15,000, cash #20,000 and debit Mary's #35,000
- C. debit goodwill #15,000, credit cash #20,000 and credit Mary's capital #20,000
- D. debit old partners capital #15,000, credit cash #20,000 and Mary's capital #35,000
Correct Answer: A. debit goodwill #15,000, cash #20,000 and credit Mary's capital #35,000
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