Question

Sangeeta, Saroj and Shanti are partners sharing profits in the ratio of 2:3:5. Goodwill is appearing in the books at a value of Rs 60,000. Sangeeta retires and goodwill is valued at Rs 90,000. Saroj and Shanti decided to share future profits equally. Record necessary Journal entries.

Answer 1

 Books of Saroj and Shanti
Journal Entries

Date	Particulars	L.F.	Amt (Rs.)	Amt (Rs.)
	Sangeeta’s Capital A/c          Dr. Saroj’s Capital A/c                 Dr. Shanti’s Capital A/c               Dr.         To Goodwill A/c (Goodwill written off)		12,000 18,000 30,000	60,000
	Saroj’s Capital A/c                 Dr.         To Sangeeta’s Capital A/c (Sangeeta’s share of goodwill adjusted to Saroj’s Capital Account in her gaining ratio)		18,000	18,000

Working Notes:
1. Sangeeta’s share of goodwill.
Total goodwill of the firm  x Retiring Partner’s share = 90,000 x `2/10` = Rs. 18,000.

2. Gaining Ratio = New Ratio – Old Ratio
Saroj’s Gaining Share = `1/2 - 3/10 = [10 - 6]/20 = 4/20`

Shanti’s Gaining Share = `1/2 - 5/10 = [10 - 10]/20 = 0/20`.