Question

S, T and U were partners in a firm sharing profits in the ratio of 1 : 2 : 2. On 15-2-2015 S died and the new profit sharing ratio of T and U was 3 : 2. On S's death the goodwill of the firm was valued at Rs 60,000.

Calculate the gaining ratio and pass necessary journal entry on S's death for the treatment of goodwill.

Answer 1

Calculation of Gaining Ratio :

Gaining Ratio of $T=\frac{3}{5}-\frac{2}{5}=\frac{1}{5}$

Gaining Ratio of $U=\frac{2}{5}-\frac{2}{5}=0$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Dr.(Rs)}& \text{Cr. (Rs)}\\ 2015& \text{T's Capital A/c}& \text{Dr.}& & 12,000& \\ \text{Feb.15}& \text{To S's Capital A/c}& \text{Dr.}& & & 12,000\\ & \text{(T's Capital account debited as he alone has gained on}& & & & \\ & \text{S's death)}& & & & \end{array}$