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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

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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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