Question

Rajan, Suman and jegan were partners in firm sharing profits and losses in the ratio of 4:3:2 Suman retired from partnership. The goodwill of the firm on the date of retirement was valued at ₹ 45,000. Pass necessary journal entries for goodwill on the assumption that the fluctuating capital method is followed.

Answer 1

Suman's share of goodwill = `45,000 xx 3/9` = Rs. 15,000

Gaining Ratio (in old ratio) = Rajan : jegan = 4 : 2

Rajan = `3/9 xx 4/6 = 12/54`

Jegan = `3/9 xx 2/6 = 6/54`

Gain Ratio = 12 : 6 or 2 : 1

Particulars	L.F.	Debit	Credit
Rajan Capital A/c  Dr. Jegan's Capital A/c  Dr.     To Suman's Capital A/c [Suman's share of goodwill is adjusted in gaining ratio]		10,000 5,000	15,000