Question

A, B and C were in partnership sharing profits and losses in the proportions of 3 : 2 : 1. On 1st April, 2024, B retires from the firm and A and C decided to share future profits in the ratio of 3 : 2. On that date their capitals were as follows: A ₹ 1,77,000; B ₹ 1,70,000 and C ₹ 1,23,000. Loss on revaluation of assets amounted to ₹ 30,000. Amount due to B was paid on this date by giving him 40,000 over and above the amount due to him. As per partnership deed, partners are allowed 6% p.a. interest on their capitals. Profit for the year ending 31st March 2025 before allowing interest on capitals amounted to ₹ 10,000.

On the basis of above information, answer the following question:

In respect of goodwill, A's Capital Account will be:

विकल्प

• Debited by ₹ 20,000

• Debited by ₹ 24,000

• Debited by ₹ 12,000

• Credited by ₹ 12,000

Answer 1

Debited by ₹ 12,000

Explanation:

₹ 40,000 paid to B is Goodwill. It will be adjusted between A and C in their gaining ratio:

Gaining Ratio = New ratio - Old ratio 

A Gains = `3/5-3/6=(18-15)/30=3/30`

C Gains = `2/5-1/6=(12-5)/30=7/30`

As such Gaining Ratio between A and C = 3 : 7

JOURNAL ENTRY FOR GOODWILL
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2019
April, 1	A's Capital A/c       ...Dr.		12,000
	C's Capital A/c       ...Dr.		28,000
	To B's Capital A/c			40,000
	(B's share of goodwill adjusted to the accounts of continuing partners in their gaining ratio of 3:7)