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Standard XII

Accountancy

Goodwill Valuation (Retirement)

Jay and Raj a...

Question

Jay and Raj are partners sharing profits in the ratio of $3 : 2$ , with effect from $1 s t$ April, $2018$ , they decided to share profits equally. Goodwill appeared in the books at Rs. $25, 000$ . As on $1 s t$ April, $2018$ , it was valued at Rs. $1, 00, 000$ . They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.

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Solution

1. Jay's Capital A/c........Dr. 15000
Raj's Capital A/c........Dr. 10000
To Goodwill A/c 25000
(Being goodwill already appearing in the books written off in old ratio)
2. Goodwill A/c..........Dr. 100000
To Jay's Capital A/c 50000
To Raj's Capital A/c 50000
(Being the revalued amount of Goodwill raised in new ratio)

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