Question

A and B were partners sharing profits equally. Since A was devoting more time to the business it was agreed that profit sharing ratio will be changed to 2 : 1 from 1st April, 2026. Following balances have been extracted from their books on this date:                                                               ₹ Capitals: A                                      5,00,000                B                                      3,00,000 General Reserve                                90,000 Profit & Loss Account (Dr.)              30,000 It is agreed between the partners that: Goodwill should be valued at ₹ 1,20,000. Profit & Loss Account (Dr.) balance is to be carried forward. Furniture (Book Value ₹ 50,000) be reduced to ₹ 30,000. Computers (Book Value ₹ 1,00,000) be reduced by ₹ 60,000.

Based on the above information, choose the correct option:

In respect of goodwill ______.

Options

• Cr. A and B by ₹ 60,000 each

• Cr. A by ₹ 40,000 and B by ₹ 20,000

• Dr. A by ₹ 20,000; Cr. B by ₹ 20,000

• Cr. A by ₹ 20,000; Dr. B by ₹ 20,000

Answer 1

In respect of goodwill Dr. A by ₹ 20,000; Cr. B by ₹ 20,000.