Question

X, Y and Z were three partners sharing profits in the ratio of 3:2:1. at the end of the year 2018-19, they distributed the profits equally. The profit for the year was Rs.1,20,000. Pass the adjustment entry to rectify the error.​

Answer 1

Answer:

The earnings and losses incurred through the enterprise are allotted among the partners in accordance with the phrases of the partnership agreement.

Explanation:

X’s Capital A/c Dr.  30,000

Y’s Capital A/c Dr.  20,000

Z’s Capital A/c Dr.  10,000

To Goodwill A/c    60,000

(Goodwill written off)    

 Dr.  14,000

X’s Capital A/c Dr.  14,000

Z’s Capital A/c    28,000

To Y’s Capital A/c    

(Adjustment of Y’s share of goodwill)    

As per new ratio, Share of Goodwill will be Rs.30000 to X and Rs.30000 to Y. Hence an adjustment entry need to be passed for adjustment of Goodwill for Rs.6000.

X A/c                                           Dr. 6000

    To Y A/c                                                   6000

(Being different of goodwill as per old ratio and new ratio is adjusted)  

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