A-LevelAccountingPreparation of financial statements9706/12 · May/June 2019 · Q131 Mark
L and M had been in partnership sharing profits and losses equally. P was admitted to the partnership and the partners continued to share profits and losses equally. Goodwill was valued at $48000 but the partners agreed that no goodwill account would be retained in the books of account. What were the accounting entries to record the goodwill?
Adebit L capital account $16000, debit M capital account $16000, credit P capital account $32000
Bdebit P capital account $32000, credit L capital account $16000, credit M capital account $16000
Cdebit L capital account $8000, debit M capital account $8000, credit P capital account $16000
Ddebit P capital account $16000, credit L capital account $8000, credit M capital account $8000
✓ Correct answer
D: debit P capital account $16000, credit L capital account $8000, credit M capital account $8000
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