Question

PARTNERSHIP ACCOUNTS: RETIREMENT AND DEATH OF A PARTNER
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9. Accounting of Gaining Ratio and Goodwill
Ram, Mohan and Sohan were partners in a firm sharing profits in the ratio of 2: 2:1. On 28th March, 2016,
Mohan died and the new profit sharing ratio of Ram and Sohan was equal. On Mohan's death the goodwill of
the firm was valued at 1,50,000.
Calculate the gaining ratio and pass necessary journal entries on Mohan's death for the treatment of goodwill
without opening goodwill account.
​

Answer 1

Answer:

Gaining Ratio=1:3

Explanation:

old ratio=2:2:1

new ratio=1:1

Gaining ratio=new ratio -old ratio

Ram's=1/2-2/5 =1/10

sohan's = 1/2-1/5= 3/10

G.R =1:3

firm's goodwill=150000

share of mohan's goodwill=150000×2/5=60000

ram's share = 60000×1/4=15000

sohan's share = 60000×3/4= 45000

journal entries:-

Ram's Capital A/C .........Dr 15000

Sohan's capital A/c....,...Dr 45000

To Mohan's capital Alc 60000