Question 20 Chapter 6 of +2 Part-1 - USHA Publication 12 Class Part - 1

Question 20 Chapter 6 of +2-Part-1

20. (Goodwill Appear in the Books) A, B and C are partners sharing in the ratio of 5: 3:2 respectively. A retires from the firm. On A's retirement goodwill has been valued at Rs. 6,40,000. There is a goodwill account in the books of the firm with a balance of Rs. 4,00,000. Give the necessary journal entries to record this arrangement assuming that B and C decide to share future profits and losses equally.

The solution of Question 20 Chapter 6 of +2 Part-1: -

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Journal

Date	Particulars		L.F.	Debit	Credit
a)	A’s capital A/c	Dr.		2,00,000
	B’s capital A/c	Dr.		1,20,000
	C’s capital A/c	Dr.		80,000
	To Goodwill A/c				4,00,000
	(Being goodwill written off in new ratio )
b)	B’s capital A/c	Dr.		1,28,000
	C’s capital A/c	Dr.		1,92,000
	To A’s capital A/c				3,20,000
	(Being goodwill adjusted through capital a/cs in gaining ratio i.e. 2 : 3)

Calculation of gaining ratio :

Old Ratio A:B: C = 5:3: 2

New Ratio B: C = 1 : 1

B’s gain	=	1	-	3
		2		10
	=	2
		10

C’s gain	=	1	-	2
		2		10
	=	3
		10

Gaining ratio = 2 : 3

Comment if you have any questions.