P, Q, R were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill is appearing in their books at Rs. 60,000 and general reserve at Rs. 20,000. Q retires and on the eve of Q’s retirement, goodwill is valued at Rs. 240,000. The new profit sharing ratio decided among P and R was 2:3. Record necessary journal entry on Q’s retirement
Answers
Answer:
P's capital account.... dr 30,000
Q's capital account... dr 18,000
R's capital account.... dr 12,000
to goodwill account 60,000
general reserve account... dr 20,000
to P's capital account 10,000
to Q's capital account 6,000
to R's capital account 4,000
first calculate sacrificing ratio
sacrifice = old share - new share
P = 2/5 - 5/10 = -1/10
R = 3/5 - 2/10 = 4/10 (gain)
R's captial account.... dr 96,000
to P's capital account 24,000
to Q's capital account 72,000
P's share in goodwill = 1/10 × 2,40,000
Q's share in goodwill = 3/10 × 2,40,000
R's gain to be given to P and Q = 2,40,000×4/10