Question

X, Y and Z were partners in a firm sharing profit in 3 : 2 : 1. The firm closes its books on 31st March every year. Y died on 30th June, 2018. On Y's death goodwill of the firm was valued at ₹ 60,000. Y's share in the profit of the firm till the date of his death was to be calculated on the basis of previous year's profit which was ₹ 1,50,000.
Pass necessary Journal entries for goodwill and Y's share of profit at the time of his death.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2018
June 30	X’s Capital A/c	Dr.		15,000
	Z’s Capital A/c	Dr.		5,000
	To Y’s Capital A/c				20,000
	(Y’s share of goodwill adjusted through X and Y’s Capital Account in gaining ratio, i.e. 3 : 1)
June 30	Profit and Loss Suspense A/c	Dr.		12,500
	To Y’s Capital A/c				12,500
	(Y’s profit share till his death debited to P&L Suspense A/c)

Working Notes:
WN 1: Calculation of Y's Share of Goodwill
$$\begin{gathered} \mathrm{Goodwill}\mathrm{of}\mathrm{the}\mathrm{Firm}=\mathrm{Rs}60,000 \\ \mathrm{Y}\text{'}\mathrm{s}\mathrm{Share}\mathrm{of}\mathrm{Goodwill}=60,000\times \frac{2}{6}=\mathrm{Rs}20,000 \\ 20,000\mathrm{will}\mathrm{be}\mathrm{debited}\mathrm{to}\mathrm{X}\text{'}\mathrm{s}\&Z\text{'}\mathrm{s}\mathrm{Capital}\mathrm{A}/\mathrm{c}\mathrm{in}\mathrm{gaining}\mathrm{ratio}\mathrm{of}3:1 \\ \mathrm{X}\mathrm{will}\mathrm{pay}=20,000\times \frac{3}{4}=\mathrm{Rs}15,000 \\ Z\mathrm{will}\mathrm{pay}=20,000\times \frac{1}{4}=\mathrm{Rs}5,000 \end{gathered}$$

WN 2: Calculation of Y's Share of Profit
$$\begin{gathered} \mathrm{Previous}\mathrm{Year}\text{'}\mathrm{s}\mathrm{Profit}=\mathrm{Rs}1,50,000 \\ \mathrm{Y}\text{'}\mathrm{s}\mathrm{share}\mathrm{of}\mathrm{Profit}(\mathrm{till}\mathrm{death})=\mathrm{Previous}\mathrm{Year}\text{'}\mathrm{s}\mathrm{Profit}\times \mathrm{Y}\text{'}\mathrm{s}\mathrm{Profit}\mathrm{Share}\times 3\mathrm{months}(\mathrm{April}01,2017\mathrm{till}\mathrm{June}30,2017) \\ \mathrm{Y}\text{'}\mathrm{s}\mathrm{share}\mathrm{of}\mathrm{Profit}(\mathrm{till}\mathrm{death})=1,50,000\times \frac{2}{6}\times \frac{3}{12}=\mathrm{Rs}12,500 \end{gathered}$$