Question

Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the books at a value of ​₹ 60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at ₹ 84,000. Hanny and Sunny decided to share future profits in the ratio of 2 : 1. Record the necessary Journal entries.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Hanny’s Capital A/c	Dr.		30,000
	Pammy’s Capital A/c	Dr.		20,000
	Sunny’s Capital A/c			10,000
	To Goodwill A/c				60,000
	(Old goodwill written-off in old ratio)
	Hanny’s Capital A/c	Dr.		14,000
	Sunny’s Capital A/c	Dr.		14,000
	To Pammy’s Capital A/c				28,000
	(Adjustment for goodwill in gaining ratio)

Working Notes:

WN1: Calculation of Pammy’s Share in Goodwill

$\begin{array}{l}\mathrm{Pammy}\text{'}s\mathrm{share}=\mathrm{Firm}\text{'}\mathrm{s}\mathrm{Goodwill}\times \mathrm{Pammy}\text{'}s\mathrm{Profit}\mathrm{Share}\\ \mathrm{Pammy}\text{'}s\mathrm{share}=84,000\times \frac{2}{6}=28,000\left(\mathrm{to}\mathrm{be}\mathrm{borne}\mathrm{by}\mathrm{gaining}\mathrm{partners}\mathrm{in}\mathrm{gaining}\mathrm{ratio}\right)\end{array}$

WN2: Calculation of Gaining Ratio

Gaining Ratio = New Ratio − Old Ratio

$\begin{array}{l}\mathrm{Hanny}\text{'}s\mathrm{gain}=\frac{2}{3}-\frac{3}{6}=\frac{1}{6}\\ \mathrm{Sunny}\text{'}s\mathrm{gain}=\frac{1}{3}-\frac{1}{6}=\frac{1}{6}\\ \mathrm{Gaining}\mathrm{Ratio}=\mathrm{1:1}\end{array}$