X, Y and Z were partners in a firm sharing profit in 3 : 2 : 1. The firm closes its books on 31st March every year. Y died on 30th June, 2018. On Y's death goodwill of the firm was valued at ₹ 60,000. Y's share in the profit of the firm till the date of his death was to be calculated on the basis of previous year's profit which was ₹ 1,50,000.
Pass necessary Journal entries for goodwill and Y's share of profit at the time of his death.
Solution
Journal
Date 
Particulars 
L.F. 
Debit Amount (Rs) 
Credit Amount (Rs) 

2018 





June 30 
X’s Capital A/c 
Dr. 

15,000 


Z’s Capital A/c 
Dr. 

5,000 


To Y’s Capital A/c 



20,000 

(Y’s share of goodwill adjusted through X and Y’s Capital Account in gaining ratio, i.e. 3 : 1) 




June 30 
Profit and Loss Suspense A/c 
Dr. 

12,500 


To Y’s Capital A/c 



12,500 

(Y’s profit share till his death debited to P&L Suspense A/c) 




Working Notes:
WN 1: Calculation of Y's Share of Goodwill
Goodwill of the frim = Rs 60,000
Y's share of goodwill = `60,000xx 2/3 = "Rs" 20,000`
20,000 will be debited to X's & Z's capital A/c in gaining ratio of 3 : 1
X will pay = `20,000 xx 3/4 = "Rs" 15,000`
Z will pay = `20,000 xx 1/4 = "Rs" 5,000`
WN 2: Calculation of Y's Share of Profit
Previous yeras profit = Rs 1,50,000
Y's share of profit (till death) = previous years profit x Ys profit share x 3 months (April 01, 2017)
Y's share of profit (till death) = `1,50,000 xx 2/6 xx 3/12 = "Rs" 12,500`