Question

Yashasvi, Nitish and Harshit were partners sharing Profit & Loss in the ratio 5 : 3 : 2. W.e.f 01 April, 2025, they decided to share future Profit & Loss in the ratio 4 : 3 : 2. On the date of reconstitution Goodwill was appearing in the books of ₹ 4,00,000. Goodwill of the firm was valued at ₹ 7,20,000 on the date of reconstitution. Determine gain or sacrifice for each partner and pass necessary entries.

Answer 1

Yashasvi’s Gain/sacrifice = `5/10 - 4/9 = 5/90` ⇒ Sacrifice

Nitish’s Gain/sacrifice = `3/10 - 3/9 = - 3/90` ⇒ Gain

Harshit’s Gain/sacrifice = `2/10 - 2/9 = - 2/90` ⇒ Gain

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i)	Yashasvi’s Capital A/c    ...Dr.		2,00,000	-
	Nitish’s Capital A/c   ...Dr.		1,20,000	-
	Harshit’s Capital A/c   ...Dr.		80,000	-
	To Goodwill A/c		-	4,00,000
	(Being existing goodwill written off)
(ii)	Nitish’s Capital A/c   ...Dr.		24,000	-
	Harshit’s Capital A/c   ...Dr.		16,000	-
	To Yashasvi’s Capital A/c		-	40,000
	(Being adjustment entry passed for goodwill)