Question

Jai and Raj are partners sharing profits in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share profits equally. Goodwill appeared in the books at ₹ 25,000. As on 1st April, 2019, it was valued at ₹ 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 Apr.1	Raj’s Capital A/c	Dr.		7,500
	To Jai’s Capital A/c				7,500
	(Adjustment for goodwill)

Working Notes:

Calculation of Gaining/Sacrificing Ratio

Sacrificing Ratio = Old Ratio ─ New Ratio

$$\begin{gathered} \mathrm{Jai}=\frac{3}{5}-\frac{1}{2}=\frac{1}{10}\left(\mathrm{sacrifice}\right) \\ \mathrm{Raj}=\frac{2}{5}-\frac{1}{2}=\frac{1}{10}\left(\mathrm{gain}\right) \end{gathered}$$

Goodwill to be adjusted = 1,00,000 ─ 25,000 = 75,000

$$\begin{gathered} \mathrm{Jai}\text{'}\mathrm{s}\mathrm{Share}=75,000\times \frac{1}{10}=7,500(\mathrm{credit},\mathrm{since}\mathrm{sacrificing}) \\ \mathrm{Raj}\text{'}\mathrm{s}\mathrm{Share}=75,000\times \frac{1}{10}=7,500(\mathrm{debit},\mathrm{since}\mathrm{gaining}) \end{gathered}$$