Question

A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1. A and C decided to retire from the firm. The goodwill of the firm was valued at ₹ 90,000. B and D decided to share future profits in the ratio of 5 : 3. Pass necessary journal entry for the treatment of goodwill.

Answer 1

Journal
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	B’s Capital A/c      ...Dr.		26,250
	D’s Capital A/c       ...Dr.		18,750
	To A’s Capital A/c			30,000
	To C’s Capital A/c			15,000
	(Being A and C’s share of goodwill debited to the gaining partners in their gaining ratio of 7 : 5)

Calculation of Gaining Ratio

B gains = `5/8-2/6=(30-16)/48=14/48`

D gains = `3/8-1/6=(18-8)/48=10/48`

B : D = 14 : 10 = 7 : 5

Working notes:

A’s share of goodwill = ₹ `90,000xx2/6` = 30,000

C’s share of goodwill = ₹ `90,000xx1/6` = 15,000

30,000 + 15,000 = ₹ 45,000

B’s Capital = `45,000xx7/12` = ₹ 26,250

D’s Capital = `45,000xx5/12` = ₹ 18,750