Question

a,b and c are partner sharing profits in the ratioof 1:2:3 c retires, his capital after making adjustments of reserve and profits on revaluation exists at 20000 .a and b have agreed to pay him 26000 in full settlement 9f his reserve of claim record necessary journal entries for goodwill if new ratio of a and b is 1:3​

Answer 1

Answer:

First calculate Gaining Ratio of remaining partner.

Second calculate share of goodwill of retiring partner.

Third compensate the retiring partner for goodwill by adjusting gaining partner's capital A/C in gaining ratio.

Gaining Partner's Capital A/C Dr

To Retiring Partner Capital A/C

Answer 2

Given:

• A, B and C are partners in a firm, sharing profits and losses in the ratio 1:2:3.
• C retires.
• C's capital is Rs 20,000.
• A and B pay C Rs 26,000 in full settlement.
• The new profit-sharing ratio is 1:3.

Objective: To pas‎s the necessary journal entries to adjust the goodwill.

Answer:

• A's old ratio = 1/6
• B's old ratio = 2/6
• C's old ratio = 3/6

• A's new ratio = 1/4
• B's new ratio = 3/4

C's goodwill = Rs 26,000 - Rs 20,000 = Rs 6,000

Calculation of the gaining ratio:

Gaining ratio = New ratio - Old ratio

For A:

• Gaining ratio = 1/4 - 1/6 = (6 - 4)/24 = 2/24

For B:

• Gaining ratio = 3/4 - 2/6 = (18 - 8)/24 = 10/24

Therefore, the gaining ratio is 2:10 or 1:5.

The goodwill will be distributed among the old partners in their gaining ratio.

• A's share of goodwill = Rs 6,000 × 1/6 = Rs 1,000
• B's share of goodwill = Rs 6,000 × 5/6 = Rs 5,000

Journal entry:

Gaining partner's capital A/c ... Dr - Rs

• To retiring partner's capital A/c - Rs

(Goodwill adjusted.)

A's capital A/c ... Dr - Rs 1,000

B's capital A/c ... Dr - Rs 5,000

• To C's capital A/c - Rs 6,000

(Goodwill adjusted.)