Question

Chandan ,tara and ravi were partners in a firm sharing profit of 2:1:2 on 15th march 2016 died ,and the ramainig partner sharing ratio between tara and ravi was 4:11 on chandan's death the goodwill of the was valued at rs.90000 calculate gaining ratio and pass necessary journal entry for the treatment of goodwill on Chandan's death without opening goodwill a/c

Answer 1

Solution :-

Existing profit sharing ratio -

Chandan  :    Tara      : Ravi 

   2/5         :     1/5      :  2/5

After the death of Chandan, new profit sharing ratio of Tara and Ravi

⇒ Tara  :  Ravi 

     4/15 :  11/15

Gaining ratio of Tara = 4/15 - 1/5

⇒ (4 - 3)/15

⇒ 1/15

Gaining ratio of Ravi = 11/15 - 2/5

⇒ (11 - 6)/15

⇒ 5/15

So, gaining ratio is 1 : 5

Value of firm's goodwill at the time of death of Chandan = Rs. 90000

Chandan's share of goodwill = (2*90000)/5

⇒ 180000/5

= Rs. 36000

Journal Entry for treatment of goodwill -

Tara's Capital A/c                                 Dr.            6000

Ravi's Capital A/c                                 Dr.          30000

                      To Chandan's Capital A/c                             36000

    (Being Tara and Ravi are debited in the gaining ratio)

Answer.