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# Jai and Raj Are Partners Sharing Profits in the Ratio of 3 : 2. with Effect from 1st April, 2019, They Decided to Share Profits Equally. - CBSE (Arts) Class 12 - Accountancy

ConceptRetirement and Death of a Partner - Calculation of New Profit Sharing Ratio

#### Question

Jai and Raj are partners sharing profits in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share profits equally. Goodwill appeared in the books at ₹ 25,000. As on 1st April, 2019, it was valued at ₹ 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.

#### Solution

Journal

 Date Particulars L.F. Debit Amount (₹) Credit Amount (₹) 2019Apr.1 Raj’s Capital A/c Dr. 7,500 To Jai’s Capital A/c 7,500 (Adjustment for goodwill)

Working Notes:

Calculation of Gaining/Sacrificing Ratio
Sacrificing Ratio = Old Ratio ─ New Ratio

Jai = 3/5 - 1/2 = 1/10 (sacrifice)

Raj = 2/5 - 1/2 = 1/10 (gain)

Goodwill to be adjusted = 1,00,000 ─ 25,000 = 75,000

Jia's share = 75,000 xx 1/10 = 7,500 (credit, since sacrificing)

Raj's share = 75,000 xx 1/10 = 7,500 (debit, since gaining)

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Solution Jai and Raj Are Partners Sharing Profits in the Ratio of 3 : 2. with Effect from 1st April, 2019, They Decided to Share Profits Equally. Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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