# 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.

#### 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