question_answer

A, B, C and D are partners sharing profits and losses in the ratio 4 : 3 : 2 : 1. C retires and the new profit sharing ratio among A, B and D is 3 : 1 : 1. Goodwill of the firm Was valued at Rs. 1,65,000 on C's retirement. Pass necessary journal entry for the treatment of goodwill. Show your working clearly.

Answer:

                                                                        JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	A's Capital A/c \[\left( 1,65,000\times 2/10 \right)\]	Dr		33,000
	D's Capital A/c \[\left( 1,65,000\times 1/10 \right)\]	Dr		16,500
	To B's Capital A/c \[\left( 1,65,000\times 1/10 \right)\]				16,500
	To C's Capital A/c \[\left( 1,65,000\times 2/10 \right)\]				33,000
	(Being retiring partner and sacrificing partner compensated by the gaining partners

Working Note Calculation of Gaining Ratio = New Ratio - Old Ratio \[\text{A}=\frac{3}{5}-\frac{4}{10}=\frac{6-4}{10}=\frac{2}{10}\] \[\text{B}=\frac{1}{5}-\frac{3}{10}=\frac{2-3}{10}=\left( \frac{1}{10} \right)\,\,\text{Sacrifice}\] \[\text{D}=\frac{1}{5}-\frac{1}{10}=\frac{2-1}{10}=\frac{1}{10}\]