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A, B, C And D Are Partners in a Firm Sharing Profits, in the Ratio of 2 : 1 : 2 : 1. on the Retirement Of C, Goodwill Was Valued ₹ 1,80,000. - Accountancy

Numerical

A, B, C and D are partners in a firm sharing profits, in the ratio of 2 : 1 : 2 : 1. On the retirement of C, Goodwill was valued ₹ 1,80,000. A, B and D decide to share future profits equally. Pass the necessary Journal entry for the treatment of goodwill.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

B’s Capital A/c

Dr

 

30,000

 

 

D’s Capital A/c

Dr.

 

30,000

 

 

     To C’s Capital A/c

 

 

 

60,000

 

(Adjustment of C’s share of goodwill)

 

 

 

 

Working Notes:

WN1:Calculation of Gaining Ratio  

`"A : B : C : D" = 2 : 1 : 2 : 1` (Old Ratio)

`"A : B : D" = 1 : 1 : 1` (New ratio)

`"Gaining Ratio" =" New Ratio - Old Ratio"`

A's Gain = `1/3 - 2/6 = (2-2)/6 = 1/6`

B's Gain = `1/3 - 1/6 = (2-1)/6 = 1/6`

D's Gain = `1/3 - 1/6 = (2-1)/6 = 1/6`

`"A : B : D" = 0 : 1 : 1`

WN2: Calculation of Retiring Partner’s Share of Goodwill

C's share of goodwill = `1,80,000 xx 2/6 = "Rs" 60,000`

C's Share of goodwill will be Brought By B and D in their gaining ratio `1 : 1`

Therefore, B's Capital A/c Will be debited with `60,000 xx 1/2 = "Rs" 30,000`

And, D's Capital A/c will be debited with `60,000 xx 1/2 = "Rs" 30,000`

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 6 Retirement/Death of a Partner
Exercise | Q 21 | Page 79
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