Question

Ravi, Guru, Mani and Sonu were partners in a firm sharing profits in the ratio of 2 : 2 : 2 : 1. On 31^st January, 2023, Sonu retired. On Sonu's retirement, the Goodwill of the firm was valued at ₹ 1,40,000. The new profit sharing ratio among Ravi, Guru and Mani was agreed as 5 : 1 : 1. Showing your workings clearly, pass necessary Journal entry for the treatment of Goodwill in the books of the firm on Sonu's retirement without opening goodwill account.

Answer 1

Ravi's old share = `2/7`, new share = `5/7`

Gain/Sacrifice = `2/7 - 5/7 = (-3)/7` (Gain)

Guru's old share = `2/7`, new share = `1/7`

Gain/Sacrifice = `2/7 - 1/7 = 1/7` (Sacrifice)

Mani's old share = `2/7`, new share = `1/7`

Gain/Sacrifice = `2/7 - 1/7 = 1/7` (Sacrifice)

Firm's Goodwill = ₹ 1,40,000

Ravi's Capital A/c to be debited with = `1,40,000 xx 3/7`

= ₹ 60,000

Particulars	Amount	Amount
Ravi's Capital A/c   ...Dr.	60,000
To Guru's Capital A/c		20,000
To Mani's Capital A/c		20,000
To Soni's Capital A/c		20,000
(Being adjustment of Goodwill)