Question

A, B and C are partners sharing profits and losses in the ratio of 2:2:1. C decided to

retire and on this date goodwill of the firm is valued at Rs. 20,000. Pass entries

when goodwill account is already appearing in the books at Rs. 15,000.​

Answer 1

Answer:

According to the new policies of accounting..

Goodwill is not to be shown in balance sheet.

but in this question we can estimate that 15000 is the new goodwill of partnership between A and B after retirement of C.

So hence goodwill of C = 1/5 * 20000 =4000

(according to the ratio provided)

As no new ratio is provided, assuming new ratio as 1:1

hence gaining ratio of A&B (new ratio - old ratio) is = 1:1 (calculated)

Journal entry:

A's Capital A/c ...Dr. 2000

B's Capital A/c ...Dr. 2000

To C's Capital A/c 4000

(Being C's goodwill returned by A&B in gaining ratio)

Now the goodwill of 15000 actually has nothing to do, just post that amt as goodwill in asset side of new balance sheet.