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# Geeta, Sunita and Anita Were Partners in Firm Sharing Profits in the Ratio of 5:3:2. Did the Accountant Give Correct Treatment? Given Reason in Support of Your Answer. - CBSE (Arts) Class 12 - Accountancy

ConceptChange in the Profit Sharing Ratio Among the Existing Partners

#### Question

Anant, Gulab and Khushbu were partners in a firm sharing profits in the ratio of 5: 3: 2. From 1.4.2014, they decided to share the profits equally. For this purpose, the goodwill of the firm was valued at Rs 2,40,000.

Pass necessary journal entry for the treatment of goodwill on the change in the profit sharing ratio of Anant, Gulab and Khushbu.

#### Solution

 Journal Date Particulars L.F Dr. Rs Cr. Rs Gulab’s Capital A/c    Dr. Khushbu Capital A/c   Dr.    To Anant’s Capital A/c (Being Gulab and Khushbu being the gaining partners compensated Anant for his share of sacrifice) 8,000 32,000 40,000

Working Notes

WN1 Calculation of Sacrifice Ratio

Old Ratio
New Ratio: 1:1:1
Sacrificing Ratio = Old Ratio – New Ratio

Anant's sacrificing ratio = 5/10 - 1/3 = 5/10

Gulab's sacrificing ratio = 3/10 - 1/3 = (-1/30) ⇒ Gaining

The share of Anant in firm's goodwill = 5/30 xx 240000 = 40000

Gulab will pay = = 40000 xxx 1/5 = 8000
Khushbu will pay = 40000 xx 4/5 = 32000