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Goodwill Valuation (Retirement)

A,B C are p...

Question

A,B & C are partners sharing profits in the ratio $2 : 2 : 1$ . On retirement of B, goodwill was valued as $R s .30, 000$ . Find the contribution of A and C to compensate B.

A

R s .20, 000

and

R s .10, 000

.

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B

R s .8, 000

and

R s .4, 000

.

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C

They will not contribute anything.

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D

Information is insufficient for any comment.

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Solution

The correct option is B $R s .8, 000$ and $R s .4, 000$ .
On retirement of B, total goodwill of the firm is Rs. 30000
B's share of goodwill = Rs. 30000 * (2/5) = Rs. 12000
Contributions by A and C to compensate B will be in their gaining ratio i.e.,2 : 1
A's contribution = Rs. 12000 * (2/3) = Rs. 8000
B's contribution = Rs. 12000 * (1/3) = Rs. 4000

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Similar questions

A, B, and C are partners in a firm sharing profits in the ratio of 3:2:1. B retires. The goodwill of the firm is valued at Rs. 60,000 and the remaining partners A and C continue to share profits in the ratio of 3:1. By what amount will the capital account of B be credited ?

A

B

are partners sharing profits in the ratio of

2 : 1

C

1 / 4^{t h}

share in profits.

C

R s . 30, 000

for his capital and

R s . 8, 000

out of his share of

R s . 10, 000

for goodwill. Before admission, goodwill appeared in books at

R s . 18, 000

. Give Journal entries to give effect to the above arrangement.

Q. A & B having share capital of Rs.

10, 000

each, share profits and losses equally. They admit C as an equal partner and goodwill was valued as Rs.

30, 000

(book value NIL). C is to bring in Rs.

20, 000

as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not be shown in the books. If profit on revaluation is Rs.

13, 000

, find the closing balance of the capital account.

A

B

are partners in firm sharing profits and losses in the ratio of

3 : 2

C

into partnership for

1 / 5^{t h}

C

R s . 30, 000

R s . 10, 000

as goodwill. At the time of admission of

C

, goodwill appears in the Balance Sheet of

A

B

R s . 3, 000

. The new profit sharing ratio of the partners will be

5 : 3 : 2

. Pass necessary Journal entries.

Q. A, B and C were partners in a firm sharing profits and losses in the ratio of

2 : 2 : 1

respectively with the capital balances of Rs.

1, 00, 000

for A and B, for C Rs.

50, 000

. B declared to retire from the firm and balance in reserve on the date was Rs.

30, 000

. If goodwill of the firm was valued as Rs.

60, 000

and profit on revaluation was Rs.

14, 100

then what amount will be transferred to the loan account of B?

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