Question 21 Chapter 6 of +2-A
Table of Contents
21. A, B, C and D are partners in firm sharing profits, in the ratio of 2: 1 : 2: 1. On the retirement of C, Goodwill was valued 1,80,000. A B and D decide to share future profits equally. Pass the necessary journal entry for the treatment of goodwill.
The solution of Question 21 Chapter 6 of +2-A: –
| Date | Particulars |
L.F. | Debit | Credit | |
| B’s Capital A/c | Dr | 30,000 | |||
| D’s Capital A/c | Dr | 30,000 | |||
| To N’s Capital A/c | 60,000 | ||||
| (Being Adjustment of C′s share of goodwill) | |||||
Working Note: –
i. Calculation of B’s share of goodwill
A :B :C 😀 = 2:1:2:1(Old ratio)
A :B :C 😀 = 2:1:2:1(Old ratio)
ii Gaining Ratio
| A’s Gain | = | 1 | – | 2 |
| 3 | 6 | |||
| = | 2 | – | 2 | |
| 6 | ||||
| = | 0 | |||
| 6 | ||||
| B’s Gain | = | 1 | – | 1 |
| 3 | 6 | |||
| = | 2 | – | 1 | |
| 6 | ||||
| = | 1 | |||
| 6 | ||||
| D’s Gain | = | 1 | – | 1 |
| 3 | 6 | |||
| = | 2 | – | 1 | |
| 6 | ||||
| = | 1 | |||
| 6 | ||||
A:B:D = 0: 1: 1
Calculation of Retiring Partner’s Share of Goodwill
| C’s share of goodwill | = | 1,80,000 | X | 2 |
| 6 | ||||
| = | Rs 60,000 |
C’s share of goodwill will be brought by B and D in their gaining ratio1:1
| Therefore, B’s and D’s Capital will be debited with | = | 60,000 | X | 2 |
| 6 | ||||
| = | Rs 30,000 |
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
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