Question

Malathi and Shobana are partners sharing profits and losses in the ratio of 5 : 4. They admit Jayasri into a partnership for 1/3 share of profit. Jayasri pays cash ₹ 6,000 towards her share of goodwill. The new ratio is 3 : 2 : 1. Pass necessary journal entry for adjusting goodwill on the assumption that the fixed capital method is followed.

Answer 1

Adjusting Goodwill = Old share – New Share

Malathi’s share = `5/9 - 3/6 = (10 - 9)/18 = 1/18`

Shobana’s share = `4/9 - 2/6 = (8 - 6)/18 = 2/18`

Journal Entry

Date	Particulars	L.F.	Debit ₹	Credit ₹
	Bank A/c/cash A/c ............Dr. To Malathi's Current A/c To Shobana's Current A/c (G/W Credited to old partners capital A/c in the sacrificing ratio)		6,000 - -	- 2,000 4,000