Question

Balu, Chandru and Nirmal are partners in a firm sharing profits and losses in the ratio of 5:3:2 on 31st March 2018, Nirmal retires from the firm. On the date of Nirmal’s retirement, goodwill appeared in the books of the firm at ₹ 60,000 By assuming fluctuating capital account, pass the necessary journal entry if the partners decide to

1. write off the entire amount of existing goodwill
2. write off half of the existing goodwill.

Answer 1

a) Write off the entire amount of existing goodwill-

Particulars	L.F.	Debit	Credit
Balu's Capital A/c  Dr. Chandru's Capital A/c  Dr. Nirmal's Capital A/c  Dr.      To Goodwill A/c [Goddwill written off]		30,000 18,000 12,000	60,000

b. Write off half of the existing goodwill.

Goodwill = `60,000 xx 1/2` = Rs. 30,000

Particulars	L.F.	Debit	Credit
Balu's Capital A/c  Dr. Chandru's Capital A/c  Dr. Nirmal's Capital A/c  Dr.      To Goodwill A/c [Half of the amount of goodwill written off]		15,000 9,000 6,000	30,000