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 Rs.60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at Rs.84,000. Hanny and Sunny decide to share future profits in the ratio of 2:1. Record the necessary Journal entries.
Date
Particulars
L.F.
Debit
(Rs.)
Credit
(Rs.)
Hanny’s
Capital A/c Dr.
30,000
Pammy’s
Capital A/c Dr.
20,000
Sunny’s
Capital A/c Dr.
10,000
To Goodwill A/c
60,000
(Existing
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
(Pammy’s
share of goodwill adjusted to Hanny’s and Sunny’s capital account in the
extent of their gain)
Working Notes:
(i)
Pammy’s share of current value of goodwill
1/3 of Rs. 84,000
= 84,000 X 1/3 = Rs. 28,000
(ii)
Gaining ratio = New share – Old share
Hanny’s
gaining share = 2/3 – 3/6 = 1/6
Sunny’s
gaining ratio = 1/3 – 1/6 = 1/6
This
gaining ratio of Hanny and Sunny is 1/6: 1/6 = 1: 1
|
Date |
Particulars |
L.F. |
Debit (Rs.) |
Credit (Rs.) |
|
Hanny’s Capital A/c Dr. |
30,000 |
|||
|
Pammy’s Capital A/c Dr. |
20,000 |
|||
|
Sunny’s Capital A/c Dr. |
10,000 |
|||
|
To Goodwill A/c |
60,000 |
|||
|
(Existing 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 |
|||
|
(Pammy’s share of goodwill adjusted to Hanny’s and Sunny’s capital account in the extent of their gain) |
Working Notes:
(i) Pammy’s share of current value of goodwill 1/3 of Rs. 84,000
= 84,000 X 1/3 = Rs. 28,000
(ii) Gaining ratio = New share – Old share
Hanny’s gaining share = 2/3 – 3/6 = 1/6
Sunny’s gaining ratio = 1/3 – 1/6 = 1/6
This gaining ratio of Hanny and Sunny is 1/6: 1/6 = 1: 1
