Question

Amar, Ram, Mohan and Sohan were partners in a firm sharing profits in the ratio of 2 : 2 : 2 : 1. On 31^st January, 2017 Sohan retired. On Sohan's retirement the goodwill of the firm was valued at Rs 70,000. The new profit sharing ratio between Amar, Ram and Mohan was agreed as 5 : 1 : 1.

Showing your working notes clearly, pass necessary Journal Entry for the treatment of goodwill in the books of the firm on Sohan's retirement.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Amar’s  Capital A/c	Dr.		30,000
	To Ram’s  Capital A/c				10,000
	To Mohan’s  Capital A/c				10,000
	To Sohan’s  Capital A/c				10,000
	(Goodwill adjusted through capitals)