Question

X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2 , decided to share future profits and losses equally with effect from 1st April, 2018. On that date , the goodwill appeared in the books at ₹ 12,000. But it was revalued at ₹ 30,000. Pass journal entries assuming that goodwill will not appear in the books of account.

Answer 1

Explanation:

. On that date , the goodwill appeared

journal entries assuming thatratio of 5 : 3 : 2 , decided to share future

Answer 2

Solution:

                                                     Journal  

Particulars                                                 Debit Rs.         Credit Rs.

X's Capital A/c                         Dr.             6,000

Ys Capital A/c                          Dr.             3,600

Z's Capital A/c                          Dr.             2,400

           To Goodwill A/c                                                        12,000

(Being goodwill written off)

Y's Capital A/c                         Dr.              1,000

Z's Capital A/c                         Dr.              4,000

To X's Capital A/c                                                                  5,000

(Being amount of goodwill adjusted on change in profit sharing ratio)  

Working Notes:

1. Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 5 : 3 : 2

New Raito (X,Y and Z) =1 : 1 : 1

Sacrificing (or Gaining ) Ratio = Old Ratio - New Ratio  

X' s Share= $\frac{5}{10}-\frac{1}{3}$ =  $\frac{15}{30}-\frac{10}{30}$ = $\frac{5}{30}$ (Sacrifice)  

Y's Share = $\frac{3}{10}-\frac{1}{3}$ = $\frac{9}{30}-\frac{10}{30}$ = $-\frac{1}{30}$ (Gain)

Z' s Share =  $\frac{2}{10}-\frac{1}{3}$ = $\frac{6}{30}-\frac{10}{30}$ = $-\frac{4}{30}$

2. Old Goodwill Written off  

X' s Share = 12, 000 x $\frac{5}{10}$ =6, 000

Y's Share= 12,000 x $\frac{3}{10}$ = 3,600

Z's Share- 12,000 x $\frac{2}{10}$ = 12 400  

3. Adjustment of Goodwill

Amount to be credited to X's Capital A / c= 30,000 x $\frac{5}{30}$ (Sacrifice) =5000

Amount to be debited to Y's Capital A /c = 30,000 x $\frac{1}{30}$  (Gain ) = 1,000

Amount to be debited to Z's Capital A /c =30,000 x $\frac{4}{30}$ (Gain) = 4, 000