Question

Hari, Mohan and Sohan were partners in a firm sharing profits in 2 : 2 : 1 ratio. The firm closes its books on 31st March every year. Mohan died on 24-8-2025. On Mohan’s death the goodwill of the firm was valued at ₹ 75,000. The partnership deed provided that on the death of a partner his share in the profits of the firm in the year of his death will be calculated on the basis of last year’s profit. The profit of the firm for the year ended 31-3-2025 was ₹ 2,00,000. Calculate Mohan’s share of profit till the time of his death and pass the necessary journal entries for the treatment of goodwill and his share of profit.

Answer 1

Journal
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(i)	Hari’s Capital A/c       ...Dr.		20,000
	Sohan’s Capital A/c    ...Dr.		10,000
	To Mohan’s Capital A/c			30,000
	(Being Mohan’s share of goodwill debited to the gaining partners in their gaining ratio of 2 : 1)
(ii)	Profit & Loss Suspense A/c    ...Dr.		32,000
	To Mohan’s Capital A/c			32,000
	(Being Mohan’s share of profit till the date of his death)

Working notes:

1. Old ratio of Hari, Mohan & Sohan = 2 : 2 : 1

 Mohan died,

New ratio of Hari & Sohan = 2 : 1

Gaining ratio = New ratio (i.e., 2 : 1)

Goodwill of the firm = ₹ 75,000

Mohan’s share of Goodwill = `75,000xx2/5`

= ₹ 30,000

2. 146 days (i.e., from 1st April, 2021 to 24 August, 2021)

Mohan’s share of Profit = `2,00,000xx146/365xx2/5`

= ₹ 32,000