A, B and C are partners sharing profits in the ratio of 4: 3: 2. B decides to retire and surrenders his share to A and
C in the ratio of 3: 1. The goodwill off the firm is valued at 1.5 years purchase of super profits based on average
profits of the last three years which were Rs. 2,00,000 Rs. 2,40,000 and Rs. 3,10,000 respectively. The normal profits
for the similar firm are Rs. 1,70,000. Goodwill already appears in the books of the firm at Rs. 72,000. The profits of
the first year after B retirement was Rs. 5,40,000. Give the necessary journal entries to adjust goodwill and to
distribute profits.
Answers
Explanation:
Answer--:
profits of the last three years which were Rs. 2,00,000 Rs. 2,40,000 and Rs. 3,10,000 respectively. The normal profits
profits of the last three years which were Rs. 2,00,000 Rs. 2,40,000 and Rs. 3,10,000 respectively. The normal profits for the similar firm are Rs. 1,70,000. Goodwill already appears in the books of the firm at Rs. 72,000. The profits of
profits of the last three years which were Rs. 2,00,000 Rs. 2,40,000 and Rs. 3,10,000 respectively. The normal profits for the similar firm are Rs. 1,70,000. Goodwill already appears in the books of the firm at Rs. 72,000. The profits of the first year after B retirement was Rs. 5,40,000. Give the necessary journal entries to adjust goodwill and to
profits of the last three years which were Rs. 2,00,000 Rs. 2,40,000 and Rs. 3,10,000 respectively. The normal profits for the similar firm are Rs. 1,70,000. Goodwill already appears in the books of the firm at Rs. 72,000. The profits of the first year after B retirement was Rs. 5,40,000. Give the necessary journal entries to adjust goodwill and to distribute profits.