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Question 16 Chapter 6 of +2-A
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Table of Contents
16. A B and C are partners sharing profits in the ratio of 3: 2: 1.
B retired and the new profit-sharing ratio between A and C was 2: 1. On B’s retirement, the goodwill of the firm was valued at 90,000. Pass necessary Journal entry for the treatment of goodwill on B’s retirement.
The solution of Question 16 Chapter 6 of +2-A: –
| Date | Particulars | L.F. | Debit | Credit | |
| A’s Capital A/c | Dr | 15,000 | |||
| C’s Capital A/c | Dr | 15,000 | |||
| To B’s Capital A/c | 30,000 | ||||
| (Being share of B’s goodwill adjusted) | |||||
Working Note: –
Old Ratio of A, B and C = 3: 2: 1
B retires from the firm
New Ratio of A and C = 2: 1
Calculation of Gaining Ratio: –
Gaining Ratio = New Ratio – Old Ratio
| A’s gaining Share | = | 2 | – | 3 |
| 3 | 6 | |||
| = | 4 | – | 3 | |
| 6 | ||||
| = | 1 | |||
| 6 | ||||
| C’s Gaining Share | = | 1 | – | 1 |
| 3 | 6 | |||
| = | 2 | – | 1 | |
| 6 | ||||
| = | 1 | |||
| 6 | ||||
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Firm’s Share of Goodwill = 90,000
B’s Share of Goodwill = Firm’s Goodwill X B’s Shares
| B’s Share of Goodwill | = | 90,000 | X | 2 |
| 6 | ||||
| = | 30,000 |
Gaining Ratio of A and C = 1:1
| A’ gain | = | B’s Goodwill | X | Gaining share of A |
| = | 30,000 | X | 1 | |
| 2 | ||||
| = | 15,000 |
| C’ gain | = | Manisha’s Goodwill | X | Gaining share of Sonia |
| = | 30,000 | X | 1 | |
| 2 | ||||
| = | 15,000 |
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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