# Question 24 Chapter 3 of Class 12 Part – 1 VK Publication

Question 24 Chapter 3 of Class 12 Part - 1 VK Publication

Question 24 Chapter 3 of Class 12 Part – 1

24. P,Q and R are partners sharing profits and losses in the ratio of 5:3:2. From 1st January 2016, they decide to share profits and losses in equal proportions. The partnership deed provides that in the event of any change in profit-sharing ratio the Goodwill should be valued at three years’ purchase of the average of five years’ profits. The profit and losses of the preceding five years are
Profits: 2011 – Rs. 60,000; 2012- Rs. 1,50,000; 2013- Rs. 1,70,000; 2014- Rs. 1,9000
Loss: 2015- Rs. 70,000.
Give the necessary journal entries to record the above change.

## The solution of Question 24 Chapter 3 of Class 12 Part – 1: –

Total Profit = 60,000+1,50,000+1,70,000+1,90,000-70,000 = Rs. 5,00,000

 Average Profit = 5,00,000 5

= Rs. 1,00,000

Goodwill at three years’ purchase= 1,00,000 x 3 = Rs . 3,00,000
Effect of change in profit sharing ratio:

 Particulars P Q R Partners’ Old Ratio 5/10 3/10 2/10 Partners’ New Ratio 1/3 1/3 1/3 Difference 5/30 (-1)/30 (-4)/30 Effect Sacrifice Gain Gain

Amount of compensation =5/30 x 3,00,000 = Rs. 50,000.

Journal Entry

 Date Particulars L . F Dr. ₹ Cr. ₹ 2016 Q’s Capital A/c Dr. 10,000 Jan. 1 R’s Capital A/c Dr. 40,000 To P’s Capital A/c 50,000 ( Being P Compensated by Q and R for the sacrifice made by him )

Comment if you have any questions.

Also, Check out the solved question of previous Chapters: –