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X, Y And Z Are Partners Sharing Profits in the Ratio of 3 : 2 : 1. Goodwill is Appearing in the Books at a Value Of ₹ 60,000. - Accountancy

Numerical

X, Y and Z are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of ₹ 60,000. Y retires and at the time of Y's retirement, goodwill is valued at ₹ 84,000. X and Z decided to share future profits in the ratio of 2 : 1. Pass the necessary Journal entries through Goodwill Account.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

X’s Capital A/c

Dr.

 

30,000

 

 

Y’s Capital A/c

Dr.

 

20,000

 

 

Z’s Capital A/c

Dr.

 

10,000

 

 

     To Goodwill A/c

 

 

 

60,000

 

(Goodwill written off)

 

 

 

 

 

 

Dr.

 

14,000

 

 

X’s Capital A/c

Dr.

 

14,000

 

 

Z’s Capital A/c

 

 

 

28,000

 

     To Y’s Capital A/c

 

 

 

 

 

(Adjustment of Y’s share of goodwill)

 

 

 

 

Working Notes:

WN1:Calculation of Gaining Ratio

`"X : Y : Z" = 3 : 2 : 1` (Old ratio)

`"X : Z" = 2 : 1` (New ratio)

Gaining ratio = New ratio - old ratio 

X's gain = `2/3 - 3/6 = 1/6`

Z's Gain = `1/3 - 1/6 = 1/6`

`"X : Z" = 1 : 1`

WN2: Calculation of Retiring Partner’s Share of Goodwill

Y's share of goodwill will be brought by X and Z in their gaining ratio `1: 1`

Therefore, X's Capital A/c will be debited with `28,000 xx 1/2 = "Rs" 14,000` 

And, Y's Capital A/c will be debited with `28,000 xx 1/2 = "Rs" 14,000`

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 6 Retirement/Death of a Partner
Exercise | Q 18 | Page 79
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