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in Reconstitution of a Partnership Firm – Retirement/Death of a Partner by (25.6k points)
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Aby, Suby and Minu are partners sharing profits in the ratio of 5:3:2. Minu retired on 31.09.06. The capital account balance and share of reserve due to Minu together amounted to Rs. 1,80,000. But Aby and Suby agreed to pay him Rs. 2,40,000. The new profit sharing ratio of Aby and Suby have been fixed at 3:2. 

1. Why has Minu been paid over and above the actual amount due to him? 

2. Give a journal entry to record this through capital a/c adjustments

1 Answer

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Best answer

A:S:M = 5:3:2 

New ratio of A & S = 3:2 

∴ Gaining ratio = New ratio – Old ratio

Gaining ratio = 1:1 

Amount payable to Minu = 2,40,000 

Capital + Reserve of Minu = 1,80,000 

∴ Share of Goodwill due to Minu = 240000 – 180000 = 60000

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