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, 2018. 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

In the books of the A, B and C

Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
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
	To B’s Capital A/c (WN1)				2,00,000
	(Being B’s share of goodwill adjusted in gaining ratio 3 : 1)
	B’s Capital A/c (WN2)	Dr.		1,25,000
	To Profit & Loss Suspense A/c				1,25,000
	(Being B’s Share of 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. 30^th June, 2018

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