JAMB Principles of Accounts 2012 Question 40

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

1. A.debit goodwill ₦15,000, cash ₦20,000 and credit Mary's capital ₦35,000
2. B.credit goodwill ₦15,000, cash ₦20,000 and debit Mary's capital ₦35,000
3. C.debit goodwill ₦15,000, credit cash ₦20,000 and credit Mary's capital ₦ 20,000
4. D.debit old partners capital ₦15,000, credit cash ₦20,000 and Mary's capital ₦ 35,000.