Question

Amar, Ram, Mohan and Sohan were partners in a firm sharing profits in the ratio of 2 : 2 : 2 : 1. On 31 st January, 2017 Sohan retired. On Sohan’s retirement the goodwill of the firm was valued at ` 70,000. The new profit sharing ratio between Amar, Ram and Mohan was agreed as 5 : 1 : 1.

Showing your working notes clearly, pass necessary Journal Entry for the treatment of goodwill in the books of the firm on Sohan’s retirement


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Answer 1

Answer:

ratio - 2:2:2:1.

let the common multiple be x...

therefore the answer will be

2x+2x+2x+1x= 70,000+2x+2x+2x

7x-6x=70,000

X=70,000

So before retirement of Soham the profit of

aman=2×70,000

=1,40,000

ram =1,40,000

mohan=1,40,000

after retirement of Soham the profit of

aman =5×70,000=3,50,000

ram=1×70,000=70,000

mohan=1×70,000=70,000