Question

Madhu, Manav and Mukul were partners in a firm sharing profits in the ratio of 3 : 2: 1. On 31st March, 2021 Mukul retired from the firm. On Mukul's retirement, goodwill of the firm was valued at ₹ 3,00,000. Pass necessary journal entry for the treatment of goodwill without opening Goodwill Account on Mukul's retirement.

Answer 1

Value of firm's goodwill = ₹ 3,00,000

Share of Mukul in firm's goodwill = ₹ `3,00,000 xx 1/6` = ₹ 50,000

This amount is to be compensated by Madhu and Manav in their gaining ratio (3 : 2). 

Amount to be compensated by Madhu = ₹ `50,000 xx 3/5` = ₹ 30,000

Amount to be compensated by Manav = ₹ `50,000 xx 2/5` = ₹ 20,000

Journal Entry
Date	Particular	L.F.	Amount Dr. (₹)	Amount Cr. (₹)
2021
Mar. 31	Madhu's Capital A/c  ...Dr.		30,000	-
	Manav's Capital A/c   ...Dr.		20,000	-
	To Mukul's Capital A/c		-	50,000
	(Being goodwill compensated by Madhu and Manav)