Question

14. A, B and C sharing profits in the ratio 3:2:1
respectively. C wants that profits be shared
equally and it should be applicable
retrospectively from the last three years. Other
partners have no objection to this. Profits for
the last three years were Rs 1,20,000, Rs
94,000 and Rs 1,10,000 respectively. Record
adjustment that means of a journal entry and
show the working notes​

Answer 1

Answer:

I think it will help you !!

Explanation:

Gaining ratio or sacrificing ration will be calculated as:

Gaining/Sacrificing Ratio = New Ratio - Old Ratio

Therefore:

For A = 1/3 - 3/6

= 2 - 3

6

= 1/6 Gaining Ratio

For B = 1/3 - 2/6

= 2 - 2

6

= No Change

For C = 1/3 - 1/6

= 2 - 1

6

= 1/6 Sacrificing Ratio

If no Goodwill account is not opened than an adjustment entry will be passed as under: Rs.18000 * 1/6 = Rs.3000

C's Capital Account Dr. 3000

To A's Capital Account 3000

If Goodwill Account is opened, first goodwill account is created by crediting partners capital account in their old profit sharing ratios:

Goodwill Account Dr. 18000

To A's Capital Account 9000

To B's Capital Account 6000

To C's Capital Account 3000

Than, Goodwill will be written off in the new profit sharing ratio:

A's Capital Account Dr.6000

B's Capital Account Dr. 6000

C's Capital Account Dr. 6000

To Goodwill Account 18000