Question

Asha, Naveen and Shalini were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Goodwill appeared in their books at a value of ₹ 80,000 and General Reserve at ₹ 40,000. Naveen decided to retire from the firm. On the date of his retirement, goodwill of the firm was valued at ₹ 1,20,000. The new profit-sharing ratio decided among Asha and Shalini is 2 : 3.
Record necessary Journal entries on Naveen's retirement.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Asha’s Capital A/c	Dr.		40,000
	Naveen’s Capital A/c	Dr.		24,000
	Shalini’s Capital A/c	Dr.		16,000
	To Goodwill A/c				80,000
	(Existing goodwill written off amongst existing partners in old ratio)
	General Reserves A/c	Dr.		40,000
	To Asha’s Capital A/c				20,000
	To Naveen’s Capital A/c				12,000
	To Shalini’s Capital A/c				8,000
	(General Reserves distributed among all partners in old ratio)
	Shalini’s Capital A/c	Dr.		48,000
	To Asha’s Capital A/c				12,000
	To Naveen’s Capital A/c				36,000
	(Goodwill adjusted by debiting gaining partner and crediting sacrificing partner and retiring partner)

$$\begin{gathered} CalculationofGainingRatio: \\ GainofaPartner=NewShare-OldShare \\ Asha\text{'}sGain\left(Sacrifice\right):\frac{2}{5}-\frac{5}{10}=\frac{4-5}{10}=\frac{(-)1}{10} \\ Shalini\text{'}sGain\left(Sacrifice\right):\frac{3}{5}-\frac{2}{10}=\frac{6-2}{10}=\frac{4}{10} \\ Therefore,BothAshaandNaveenwouldbecompensatedbyShaliniintheratioof1:3 \\ Asha\text{'}sSacrificefor\frac{1}{10}thShare=1,20,000\times \frac{1}{10}=12,000 \\ Naveen\text{'}sSacrificefor\frac{3}{10}thShare=1,20,000\times \frac{3}{10}=36,000 \end{gathered}$$