Question

2.
Avya, Divya and Kavya were equal partners. They decided to change the
profit sharing ratio to 4 : 3 : 2. For this purpose the goodwill of the firm
was valued at 90,000.
The journal entry for the treatment of Goodwill on change in profit
sharing ratio will be:
__________________________
Particular | Debit | Credit
| Amt. (*₹) | Amt. )
__________________________
(a) Kavya's Capital A/c. Dr. 10,000
To Avya's Capital A/c.10,000
___________________________
(b) Divya's Capital A/c. Dr. 10,000
To Avya's Capital A/c.10,000
___________________________
(c) Avya's Capital A/c. Dr. 90,000
To Kavya's Capital A/c.90,000
___________________________
(d) Avya's Capital A/c. Dr. 10,000
To Kavya's Capital A/c.10,000
___________________________​

Answer 1

option (d) is the answer

Answer 2

The correct journal entry is option (d)

Given:

old ratio = 1:1:1

new ratio = 4:3:2

goodwill = 90000

To find:

the journal entry for tge treatment of goodwill.

Solution

$sacrificing \: ratio \\ = old \: ratio - new \: ratio$

sacrificing ratio of Avya

$sacrificing \: ratio = \frac{1}{3} - \frac{4}{9}$

$sacrificing \: ratio = \frac{3 - 4}{9}$

$sacrificing \: ratio = - \frac{1}{9}$

Sacrificing ratio of Divya

$sacrificing \: ratio = \frac{1}{3} - \frac{3}{9}$

$sacrificing \: ratio = \frac{3 - 3}{9}$

$sacrificing \: ratio = 0$

Sacrificing ratio of Kavya

$sacrificing \: ratio = \frac{1}{3} - \frac{2}{9}$

$sacrificing \: ratio = \frac{3 - 2}{9}$

$sacrificing \: ratio = \frac{1}{9}$

Since the sacrificing ratio of Avya is negative it indicates that she does not sacrifices but rather gains the ratio.

On the other hand Kavya will sacrifice the ratio which will now go to Avya.

Sacrificing Amount of goodwill

$sacrificing \: goodwill \: of \: kavya \\ = \frac{1}{9} \times 90000$

$sacrificing \: goodwill \: of \: kavya \\ = 10000$

Therefore the amount of Goodwill that Kavya will sacrifice to Avya is Rs. 10,000.

The journal entries will be

Avya's Capital A/c Dr 10,000

To Kavya's Capital A/c Cr 10,000

(Being Goodwill sacrificed by Kavya to Avya in respect to the new partnership ratio)