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# A, B And C Shared Profits and Losses in the Ratio of 3 : 2 : 1 Respectively. - CBSE (Arts) Class 12 - Accountancy

ConceptRetirement and Death of a Partner - Calculation of New Profit Sharing Ratio

#### Question

A, B and C shared profits and losses in the ratio of 3 : 2 : 1 respectively. With effect from 1st April, 2019, they agreed to share profits equally. The goodwill of the firm was valued at ₹ 18,000. Pass necessary Journal entries when: (a) Goodwill is adjusted through Partners' Capital Accounts; and (b) Goodwill is raised and written off.

#### Solution

Calculation of Gain/Sacrifice made by the partners:

 Particulars A B C Old Ratio 3/6 2/6 1/6 New Ratio 1/3 1/3 1/3 Gain/Sacrifice 1/6 (Sacrifice) Nil -1/6 (Gain)

Case a)

Journal

 Date Particular L.F. Debit Amount(₹) Credit Amount(₹) 2019 April 1 C’s Capital A/c (18,000×1/6) Dr. 3,000 To A’s Capital A/c (18,000×1/6) 3,000 (Being Adjustment for goodwill)

Case b)

Journal

 Date Particular L.F. Debit Amount(₹) Credit Amount(₹) 2019 April 1 Goodwill A/c Dr. 18,000 To A’s Capital A/c (18,000×3/6) 9,000 To B’s Capital A/c (18,000×2/6) 6,000 To C’s Capital A/c (18,000×1/6) 3,000 (Being goodwill raised in the books) A’s Capital A/c (18,000×1/3) Dr. 6,000 B’s Capital A/c (18,000×1/3) Dr. 6,000 C’s Capital A/c (18,000×1/3) Dr. 6,000 To Goodwill A/c 18,000 (Being goodwill so raised written off)
Is there an error in this question or solution?

#### APPEARS IN

Solution A, B And C Shared Profits and Losses in the Ratio of 3 : 2 : 1 Respectively. Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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