Concept:When a new partner brings in both capital and goodwill, the assets received are debited and the partner’s capital account is credited with the total value brought in.
Explanation:Mary brings in cash of
#20,000 and goodwill valued at
#15,000.
Her total contribution is therefore
#20,000+#15,000=#35,000.
The firm receives two assets: cash and goodwill.
Cash is debited with
#20,000 because it is an asset coming into the business.
Goodwill is also an asset, so it is debited with
#15,000.
Mary’s capital account is credited with the full
#35,000 because this is the total value she has contributed.
Goodwill remains on the assets side of the balance sheet as a debit balance.
Answer:Debit Goodwill
#15,000; debit Cash/Bank
#20,000; credit Mary’s Capital
#35,000.
Therefore, the correct option is A.