On the admission of Rao, goodwill of Murty and Shah is valued at RS.30,000. Rao is to get 1/4th share of profits. Previously Murty and Shah sharing profits in the ratio of 3 : 2. Rao is unable to bring amount of goodwill. Given Journal entries in the books of Murty and Shah when: (a) there is no Goodwill Account and (b) Goodwill appears in the books at RS.10,000,

Explanation

(a) Dr. Rao's Capital A/c or Rao's Current A/c-RS.7,500, Cr.Murty's Capital A/c- RS.4,500 and Shah's Capital A/c-RS.3,000.
(b) (i) Dr. Murty's Capital A/c-RS.6,000 and shah's Capilat A/c-RS.4,000, Cr.Goodwill A/c-RS.10,000.
(ii) Dr. Rao's Capital A/c or Rao's Currnet A/c-RS.7,500, Cr. Murty's Capital A/c-RS.4,500 and Shah's Capital A/c-RS.3,000.