Question

X, Y and Z are partners sharing profits and losses in the ratio of 3:2:1 and their capitals are
10,000, 1,20,000 and 60,000 respectively. It is decided that with effect from April 1, 2019, the profit
sharing ratio will be 2:2:1.
The partnership deed states that goodwill is to be valued at 2 years' purchase of average of 3 years'
profits and capitals of the partners should be proportionate to the profit sharing ratio,
The profits for the last three years 2016-17, 2017-18 and 2018-19 were 1,20,000,? 1,00,000 and
140,000 respectively.
Make necessary joumal entries in the books of the firm.​

Answer 1

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