Question

X,h and z were partners in a firm sharing profits in the radio of 3:2:1. Z retired and the new profit sharing radio between X and y was 1:2.on z's retirement the goodwill of the firm was valued at 30,000. pass necessary Journal entry for the treatment of good will on Z's retirement.



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Answer 1

Answer:

Z share of goodwill = 30000*1/6 = 5000

gaining ratio = new ratio- old ratio

X = 1/3-3/6

= 6-9/18

=(-)3/18. = 1/6 ( sacrifice)

Y = 2/3-2/6

= 12-6/18

= 6/18. = 1/3 ( gain)

X sacrifice andY gains. So Y compensate both X and Z

X share in goodwill 30000*1/6 = 5000

journal for goodwill

Y's capital account Dr. 10000

To X's capital a/c. 5000

To Z's capital a/c 5000

3/18:6/18

1:2