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Neetu, Meetu and Teetu Were Partners in a Firm. on 1st January, 2018, Meetu Retired - Accountancy

Neetu, Meetu and Teetu were partners in a firm. On 1st January, 2018, Meetu retired. On Meetu's retirement the goodwill of the firm was valued at Rs 4,20,000.
Pass necessary journal entry for the treatment of goodwill on Meetu's retirement.

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Solution

As the profit sharing ratio is not given, it is assumed to be equal, thus, Meetu’s Sharein profits is 1/3.

Goodwill of the firm = Rs. 4,20,000

Meetu’s share of goodwill `=4,20,000xx1/3=1,40,000`

 Date        Particulars    L.F.   

Debit Amount

Rs

Credit Amount

Rs

Jan 1,2018 Neetu’s Capital A/c      Dr   70,000  
 

Teetu’s Capital A/c     Dr

 

  70,000  
  To Meetu’s Capital A/c     1,40,000
  (Being goodwill adjusted in the ratio 1:1)      
Concept: Retirement Or Death of a Partner - Treatment of Goodwill
  Is there an error in this question or solution?
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