Question

A, B and C were partners sharing profits and losses in the ratio of 7 : 3 : 2. From 1st January, 2023 they decided to share profits and losses in the ratio of 8 : 4 : 3. Goodwill is ₹ 1,20,000. In Adjustment entry for goodwill:

Options

• Cr. A by ₹ 6,000; Dr. B by ₹ 2,000; Dr. C by ₹ 4,000

• Dr. A by ₹ 6,000; Cr. B by ₹ 2,000; Cr. C by ₹ 4,000

• Cr. A by ₹ 6,000; Dr. B by ₹ 4,000; Dr. C by ₹ 2,000

• Dr. A by ₹ 6,000; Cr. B by ₹ 4,000; Cr. C by ₹ 2,000

Answer 1

Cr. A by ₹ 6,000; Dr. B by ₹ 2,000; Dr. C by ₹ 4,000

Explanation:

Given:

• Old Ratio = 7 : 3 : 2
• New Ratio = 8 : 4 : 3
• Goodwill = ₹ 1,20,000

Step 1: Calculate Old and New Shares

Old share (Total = 12):

• A =`7/12`
• B = `3/12`
• C = `2/12`

New share (Total = 15):

• A = `8/15`
• B = `4/15`
• C = `3/15`

Step 2: Find Sacrifice/Gain

Partner	Old	New	Gain/Sacrifice
A	`7/12` = `35/60`	`8/15` = `32/60`	Sacrifice = `3/60` = `1/20`
B	`3/12` = `15/60`	`4/15` = `16/60`	Gain = `1/60`
C	`2/12` = `10/60`	`3/15` = `12/60`	Gain = `2/60` = `1/30`

Step 3: Calculate Amount

A sacrifices:

`1/20 xx 1,20,000 = 6,000`

B Gains:

`1/60 xx 1,20,000 = 2,000`

C Gains:

`1/30 xx 1,20,000 = 4,000`