Question 4 Chapter 4 of Class 12 Part – 1 Usha Publication

Question 4 Chapter 4 of Class 12 Part – 1 Usha Publication

4. (Goodwill doesn’t exist) X, Y and Z are partners sharing profits in 5:3:2 ratio. From 1st January 2016, they decide to share profits and losses in 2:5:3 ratio. The partnership deed provides that in the event of any change in profit sharing ratio, the goodwill is valued at Rs.54,000. Give the necessary single adjusting entry to record the above transaction.

The solution of Question 4 Chapter 4 of Class 12 Part – 1 Usha Publication: -

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Old Ratio of X, Y, & Z	=	5 : 3: 2
New Ratio of X, Y, & Z	=	2: 5 : 3

Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio - New Ratio

X’s Sacrificing/Gaining Share	=	5	-	2
		10		10

=	5 - 2
		10

=	3	(Sacrifice)
			10

Y’s Sacrificing/Gaining Share	=	3	-	5
		10		10

=	3 - 5
		10

=	-2	(Gain)
			10

Z’s Sacrificing/Gaining Share	=	2	-	3
		10		10

=	2 - 3
		10

=	-1	(Gain)
			10

Journal

Date	Particulars		L.F.	Debit	Credit
2016
Jan 1	Y’s Capital A/c (54,000 X 2/10)	Dr.		10,800
	Z’s Capital A/c (54,000 X 1/10)	Dr.		5,400
	To X’s Capital A/c				16,200
	(Being amount of goodwill adjusted as the change in profit sharing ratio)

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