Question

A, B, C and D are partners in a firm, sharing profits in the ratio of $2:1:2:1$. On the retirement of C the Goodwill was valued at $Rs,72,000$. A, B and D decided to share future profits equally. The necessary journal entry without opening goodwill account will be:

• A. A's cap. A/c Dr. $Rs.8,000$
  B's cap. A/c Dr. $Rs.8,000$
  D's cap. A/c Dr. $Rs.8,000$
  To C's cap. A/c $Rs.24,000$
• B. A's cap. A/c Dr. $12,000$
  B's cap. A/c Dr. $Rs.12,000$
  To C's cap. A/c $Rs.12,000$
  To D's cap. A/c $Rs.12,000$
• C. B's cap. A/c Dr. $12,000$
  D's cap. A/c Dr. $12,000$
  To C's cap. A/c $24,000$
• D. B's cap. A/c Dr. $24,000$
  To C's cap. A/c $24,000$

Answer 1

The correct option is C B's cap. A/c Dr. $12,000$

D's cap. A/c Dr. $12,000$
To C's cap. A/c $24,000$
Old profit sharing ratio ( A : B : C : D) = 2 : 1 : 2 : 1

New profit sharing ratio (A : B : D) = 1 : 1 : 1

C's share of goodwill = 72000 * (2/6) = 24000

Adjusting entry for goodwill

Partner	Old share	New share	Gain	Sacrifice
A	2/6	1/3	-	-
B	1/6	1/3	1/6	-
C	2/6	-	-	2/6
D	1/6	1/3	1/6	-

Adjusting entry:

B's Capital A/c Dr. 12000

D's Capital A/c Dr. 12000

To C's capital A/c 24000