Question

A, B and C are partners sharing profits in the ratio of 4/9:3/9:2/9. B retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at? Rs.1,39,200. A and C agreed to pay him? Rs.1,50,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at 5:3.

Answer 1

Working Note :

i. calculation of B's share of goodwill

A'B and C are sharing profit in ratio 4/9 : 3/9: 2/9

B retire from the firm. remaing partners agreed to pay his = Rs.1,50,000

B's Capital after making necessary adjustment = Rs. 1,39,200

Therefore, Hidden Goodwill is Rs.(1,50,000-1,39,200) i,e, Rs. 10,800

ii Gaining Ratio

New profit sharing ratio between A and B is 5:3

Thus, B' s share of goodwill will be brought in by A and C in the Gaining Ratio 13: 11 i e,