P, Q and R were partners sharing profits in the ratio 5 : 3 : 2 respectively. P retires from the firm and Q and R decide to share future profits equally. Goodwill is valued at Rs50,000. Adjustment entry for goodwill will be :
Answer & explanation
Correct answer: option 4
Gain of Q= 1/2-3/10=2/10
Gain of R=1/2-2/10=3/10
Gaining Ratio= 2:3
Goodwill = 50000
Share of P's Goodwill = 50000 x 5/10
= 25,000
Q's Capital A/c Dr. 10,000
R's Capital A/c Dr. 15,000
To P"s Capital A/c 25,000