Question

A, B and C were partners sharing profits in the ratio of 3 : 2 : 1. The firm closes its books on 31st March every year. B died on 30th June, 2025. On his death, Goodwill of the firm was valued at ₹ 6,00,000. B’s share in profit or loss till the date of death was to be calculated on the basis of previous year’s profit which was ₹ 15,00,000 (loss).

Pass necessary journal entries for goodwill and his share of loss.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2025
June 30	A’s Capital A/c `(2,00,000 × 3/4)`   ...Dr.		1,50,000	-
	C’s Capital A/c `(2,00,000 × 1/4)`   ...Dr.		50,000	-
	(Being B’s share of goodwill adjusted in gaining ratio 3 : 1)		-	2,00,000
June 30	B’s Capital A/c   ...Dr.		1,25,000	-
	To Profit & Loss Suspense A/c		-	1,25,000
	(Being B’s share of the loss debited to his capital)

Working Notes:

1. Calculation of B’s Share of Goodwill

Goodwill = ₹ 6,00,000

B’s Share of Goodwill = `6,00,000 × 2/6`

= ₹ 2,00,000

2. Calculation of B’s Share of Loss till the Date of His Death, i.e., 30th June, 2025

Previous year’s loss = ₹ 15,00,000

B’s share of loss till the date of death = `"Previous year’s loss" × "B’s Share of Loss" × "Months till the date of his death"/12`

= `(15,00,000 × 2/6 × 3/12)`

= ₹ 1,25,000