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Question 5 Chapter 4 - Unimax Class 12 Part 1
5. X, Y and Z are partners of firm sharing profits and losses in ratio of 3 : 2 : 1. They decided to share profits equally with effect from 1st April, 2021. For this purpose goodwill of the firm has been valuled at Rs. 240000. Calculate the amount of gain or sacrifice of each partner and pass journal entry for treatment of goodwill.
(a) When Goodwill is adjusted through Partner’s Capital Accounts.
(b) When Goodwill Accounts is raised and written off.
| Old Share | New Share | Difference |
| X 3/6 | 1/3 | 3/6-1/3=1/6 (Sacrifice) |
| Y 2/6 | 1/3 | 2/6-1/3=0 (No Change) |
| Z 1/6 | 1/3 | 1/6-1/3=[1/6] (Gain) |
Gaining Partner Z will pay to the sacrificing partner X, the share of goodwill i.e. Rs. 240000 x 1/6 = Rs. 40000
Journal entry :
Z’s Capital A/c Dr. = Rs. 40000
To X’s Capital A/c = Rs. 40000
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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