Question

Jai and Raj are partners sharing profits in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share profits equally. Goodwill appeared in the books at ₹ 25,000. As on 1st April, 2019, it was valued at ₹ 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 Apr.1	Raj’s Capital A/c	Dr.		7,500
	To Jai’s Capital A/c				7,500
	(Adjustment for goodwill)

Working Notes:

Calculation of Gaining/Sacrificing Ratio
 Sacrificing Ratio = Old Ratio ─ New Ratio

Jai = `3/5 - 1/2 = 1/10` (sacrifice)

Raj = `2/5 - 1/2 = 1/10` (gain)

Goodwill to be adjusted = 1,00,000 ─ 25,000 = 75,000

Jia's share = `75,000 xx 1/10` = 7,500 (credit, since sacrificing)

Raj's share = `75,000 xx 1/10` = 7,500 (debit, since gaining)