Question

# A, B and C were partners sharing profits in the ratio of 3 : 2 : 1. The firm closes its books on 31st March every year. B died on 30th June, 2018. On his death, Goodwill of the firm was valued at ₹ 6,00,000. B's share in profit or loss till the date of death was to be calculated on the basis of previous year's profit which was ₹ 15,00,000 (Loss). Pass necessary Journal entries for goodwill and his share of loss.

Solution

## In the books of the A, B and C Journal Date Particulars   L.F. Debit Amount (₹) Credit Amount (₹) 2018           June 30 A’s Capital A/c (2,00,000 × 3/4) Dr.   1,50,000     C’s Capital A/c (2,00,000 × 1/4) Dr.   50,000       To B’s Capital A/c (WN1)       2,00,000   (Being B’s share of goodwill adjusted in gaining ratio 3 : 1)                       B’s Capital A/c (WN2) Dr.   1,25,000       To Profit & Loss Suspense A/c       1,25,000   (Being B’s Share of loss debited to his Capital)           Working Notes:                               1. Calculation of B’s Share of Goodwill Goodwill = ₹ 6,00,000 B’s Share of Goodwill = ₹ (6,00,000 × 2/6) = ₹ 2,00,000 2. Calculation of B’s Share of Loss till the date of his death i.e. 30th June, 2018 Previous year’s loss = ₹ 15,00,000 B’s share of loss till the date of death = Previous year’s loss × B’s Share of Loss × Months till the date of his death/12   = ₹ (15,00,000 × 2/6 × 3/12)   = ₹ 1,25,000 AccountancyTS Grewal Vol. I (2019)All

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