Question

A, B, C and D are partners in a firm sharing profits in the ratio of 2 : 1 : 2 : 1. On the retirement of C, Goodwill was valued ₹ 1,80,000. A, B and D decide to share future profits equally. Pass the necessary journal entry for the treatment of goodwill.

Answer 1

Answer:

Rs.30,000

Explanation:

working notes:

WN1: calculate the gaining ratio " A,B,C,D "="1:1:2:1 (old ratio)

A:B:C=1:1:1 (new ratio)

gaining ratio =new ratio - old ratio

A's gain =1/3-2/6=(2-2)/6

=1/6

B's gain = 1/3-1/6=(2-1)/6

=1/6

D's gain =1/3-1/6=(2-1)/6

=1/6

A:B:D=0:1:1

WN2: calculating of retrying partner's share of godwill

C's share of goodwill =1,80,000 of 2/6

=Rs.60,000

C's share of goodwill will be brought by B and D in their gaining ratio 1:1

There fore B's capital A/c will be debited with

60,000*1/2

=Rs.30,000

And D's capital A/c will be debited with

60,000*1/2

=Rs.30,000

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Answer 2

Working Notes:

WN1: Calculation of Gaining Ratio

A :B :C :D=2:1:2:1 (Old ratio)

A :B :D =1:1:1 (New ratio)

Gaining Ratio = New Ratio - Old Ratio

$\text { A's Gain }=\frac{1}{3}-\frac{2}{6}=\frac{2-2}{6}=0$

$\text { B's Gain }=\frac{1}{3}-\frac{1}{6}=\frac{2-1}{6}=\frac{1}{6}$

$\begin{aligned}&\text { D's Gain }=\frac{1}{3}-\frac{1}{6}=\frac{2-1}{6}=\frac{1}{6}\\&A: B: D=0: 1: 1\end{aligned}$

WN2: Calculation of Retiring Partner’s Share of Goodwill

$\text { C's share of goodwill }=1,80,000 \times \frac{2}{6}=\mathrm{Rs} 60,000$

C's share of goodwill will be brought by B and D in their gaining ratio1:1

Therefore, B's Capital A/c will be debited with $60,000 \times \frac{1}{2}=\mathrm{Rs} 30,000$

And, D's Capital A/c will be debited with $60,000 \times \frac{1}{2}=\mathrm{Rs} 30,000$