a b c were partners in a firm sharing profits and losses in the ratio of 4:3:2. B retired and his shares were taken over by a and c equally.
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Explanation:
ACCOUNTANCY
A, B and C are partners with profit sharing ratio 4 :3 : 2. B retires and Goodwill was valued Rs. 10,800. If A & C share profits in 5 :3, find out the goodwill shared by A and C favour of B.
November 22, 2019avatar
Ajin Maddela
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1. Calculation of gaining ratio
Old ratio (A, B and C) = 4 : 3 : 2
B retires from the firm
New artio (A and C ) = 5 : 3
Gaining ratio = New ratio - Old ratio
A's new share = (5/8) - (4/9) = (45 - 32) /72 = 13/72
C's new share = (3/8) - (2/9) = (27 - 16) / 36 = 11/72
gaining ratio = 13 : 11
2. Adjustment of goodwill
C's share of goodwill = (10800 * 3) / 9 = 3600
This share of goodwill is to be debited to remaining partners' capital account in their gaining ratio (i.e., 13 : 11 )
Journal entry for the above will be:
A's capital A/c Dr. 1950
C's capital A/c Dr. 1650
To B's capital A/c 3600