If a partner is unable to bring his share of goodwill, then his capital a/c will be debited or current a/c will be debited if nothing is mentioned?
Dear Student,
When the new partner does not bring his share of goodwill in cash, then the goodwill can be adjusted either through Incoming Partner' Current/Capital Account.
Generally, it is adjusted through the capital account, however, the alternative option is to adjust the goodwill through Current Account. However, if the question specifies that the goodwill is to be adjusted by opening the current account, then certainly Incoming Partner's Current Account is debited and Sacrificing Partners' Capital Accounts are credited.In both the cases (whether goodwill adjusted through the Current A/c or Capital A/c), we will record the items such as interest on capital, drawings, salary etc. in Partners' Capital Account only (unless it is specified in the question that capital accounts are maintained under fixed method).
Regards
When the new partner does not bring his share of goodwill in cash, then the goodwill can be adjusted either through Incoming Partner' Current/Capital Account.
Generally, it is adjusted through the capital account, however, the alternative option is to adjust the goodwill through Current Account. However, if the question specifies that the goodwill is to be adjusted by opening the current account, then certainly Incoming Partner's Current Account is debited and Sacrificing Partners' Capital Accounts are credited.In both the cases (whether goodwill adjusted through the Current A/c or Capital A/c), we will record the items such as interest on capital, drawings, salary etc. in Partners' Capital Account only (unless it is specified in the question that capital accounts are maintained under fixed method).
Regards