Read the following passage and answer the question.
Ravi, Kavi and Sunny are partners in a firm sharing profits and losses in the ratio 4 : 2 : 3. On 1st April 2022, Sunny gives notice for his retirement. His share was taken by Ravi and Kavi in 13 : 11 and goodwill of the firm was valued at ₹ 72000.
After three months, they admit Hari as a new partner for $\frac{1}{5}$th share in firm who brings ₹ 2,00,000 as capital and necessary amount for goodwill in cash which was valued ₹ 80,000 for the firm. Hari acquired his share equally from Ravi and Kavi.
Identify, what entry will be passed for adjustment of goodwill on Sunny's retirement?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) -
Ravi's capital A/c Dr 13,000
Kavi's capital A/c Dr 11,000
To Sunny's Capital A/c 24,000.
Goodwill of the firm = 72,000
Sunny's share in goodwill = 72,000 x 3/9
= 24,000
Gaining ratio between Ravi and Kavi = 13 : 11
Ravi's compensate = 24,000 x 13/24
= 13,000
Kavi's compensate = 24,000 x 11/24
= 11,000
Journal entry for this-
Ravi's capital A/c Dr 13,000
Kavi's capital A/c Dr 11,000
To Sunny's Capital A/c 24,000