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Question

# A, B, C and D are parnters sharing profits in the ratio of 1 : 4 : 3 : 2. D retired and the goodwill is valued at Rs 2,00,000. D's share of goodwill is to be adjusted into the capital accounts of A, B and C who decide to share future profits in the ratio of 4 : 3 : 3. Pass necessary journal entry.

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Solution

## JOURNAL DateParticularsL.F.Dr.(Rs)Cr. (Rs)A's Capital A/c (310 of 2,00,000)Dr.60,000 To B's Capital A/c (110 of 2,00,000)20,000 To D's Capital A/c (210 of 2,00,000)40,000(A gains 310th share of profit whereas B loses 110th shareof profit and D losses 210th share of profit. A compensatesB and D for the loss in share of profits) Working Notes : (i) D's share of goodwill =2,00,000×210=Rs 40,000. (ii) Calculation of Gaining Ratio : ABCDNew Ratio410310310−Old Ratio110410310210New Ratio - Old Ratio =310(Gain)110(Sacrifice)0210(Sacrifice) Only A has gained 310. Hence A will be debited and B and D will be credited.

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