X Y and Z are partners sharing profits in the ratio of 2:3:5. Goodwill is appearing in
their books at a value of 1,00,000. X retires and on the day of X's retirement Goodwill
is valued at 90,000. Y and Z decided to share future profits equally. Pass the necessary
Journal Entries.
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Answer:
WN1: Calculation of Gaining Ratio
X :Y :Z=3:2:1 (Old ratio)
X :Z = 2:1 (New ratio)
Gaining Ratio = New Ratio - Old Ratio
WN2: Calculation of Retiring Partner’s Share of Goodwill
Y's share of goodwill will be brought by X and Z in their gaining ratio 1:1
Therefore, X's Capital A/c will be debited with
And, Y's Capital A/c will be debited with
Explanation:
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