Question

14. A, B and C were partners in a firm sharing profit & loss in the ratio of 1: 3: 2. They
decided that with effect from 1st April, 2017, they will share profits in the ratio of
4:6:5. For this purpose, the goodwill of the firm is valued at the total of preceding
three years' profits. The profits were :
₹
2012-13
40,000
2013-14
10,000 Loss
2014-15
80,000 Loss
2015-16
1,20,000
2016-17
1,40,000
Reserves and Profits appeared in the balance sheet at * 40,000 and 30,000 respectively.
Partners neither want to show goodwill in the books nor want to distribute the reserves
and profits appearing in the balance sheet. Pass a single journal entry to record the change.
[Ans : Debit A and Credit B by 25,000]​

Answer 1

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