Question

X and Y shared profit and losses in the ratio of 3:2. With effect from 1st April they agreed to share profits equally. The goodwill of the firm was valued at Rs 30,000. The necessary single adjusting entry will involve.

• A. Debit Y and Credit X by Rs 3,000
• B. Debit X and Credit Y with Rs 3,000
• C. Debit X and Credit Y with Rs 300
• D. Debit Y and Credit X with Rs 300

Answer 1

The correct option is B Debit X and Credit Y with Rs 3,000

Earlier Goodwill was shared among X and Y in ratio 3:2

i.e. 30000*3/5=18000

• 30000*2/5=12000
• With effect from 1st April, goodwill is to be shared equally

30000*1/2= Rs.15000 each.

X = 18000-3000=15000

Y= 12000+3000=15000

Hence, Y's A/c will be credited by 3000 and X's A/c will be debited.