Question

Alia, Karan and Shilpa were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill appeared in their books at a value of ` 60,000 and General Reserve at ` 20,000. Karan decided to retire from the firm. ON the date of his retirement, goodwill of the firm were valued at ` 2,40,000. The new profit sharing ratio decided among Alia & Shilpa was 2:3. Record necessary journal entries on Karan’s retirement.​

Answer 1

Answer:

The answer will be:

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Answer 2

Explanation:

                                                    JOURNAL

Date                               Particulars                                 LF     Debit        Credit

  1.          Alia capital a/c                                     dr                    7200

              Karan capital a/c                                 dr                    21600

                       to Shilpa capital a/c                                                           28800

Working Notes:

   (1)  Calculation of Gaining Ratio:

                   New ratio - Old Ratio

                 Alia      = 2/5 - 5/10 = (1/10)

                 Shilpa   = 3/5 - 2/10 = 4/10

                 Karan    = 0 - 3/10    = (3/10)

         Alia is sacrificing and Shilpa is gaining.

   (2) Calculation of Goodwill :

             Goodwill of the firm = 240000

                     Karan's share of goodwill = 240000 x 3/10 = 72000

             Therefore,  

                     Alia = 72000 x 1/10 = 7200

                     Karan = 7200 x 3/10 = 21600

                    Shilpa = 72000 x 4/10 = 28800