Question

Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of ​₹ 60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at ₹ 84,000. Hanny and Sunny decided to share future profits in the ratio of 2 : 1. Record the necessary Journal entries. 

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Hanny’s Capital A/c	Dr.		30,000
	Pammy’s Capital A/c	Dr.		20,000
	Sunny’s Capital A/c			10,000
	To Goodwill A/c				60,000
	(Old goodwill written-off in old ratio)
	Hanny’s Capital A/c	Dr.		14,000
	Sunny’s Capital A/c	Dr.		14,000
	To Pammy’s Capital A/c				28,000
	(Adjustment for goodwill in gaining ratio)

Working Notes:

WN1: Calculation of Pammy’s Share in Goodwill

Pammy's share = Firm's Goodwill x Pammy's profit share    

Pammy's share = `84,000 xx 2/6 = 28,000` (to be borne by gaining partners in gaining ratio)

WN2: Calculation of Gaining Ratio

Gaining Ratio = New Ratio − Old Ratio

Hanny's gain = `2/3 - 3/6 = 1/6`

Sunny's gain = `1/3 - 1/6 = 1/6`

Gaining ratio = `1 : 1`