A, B & C are partners sharing profits in the ratio of 5:4:1. Their capital accounts showing balance of ₹300000, ₹150000, ₹150000 respectively. It is decided between partners that they will share future profits equally. Firm has the following information-
Creditors- ₹110000
Salary payable- ₹30000
O/s expenses- ₹10000
General reserve- ₹40000
Bank balance- ₹210000
Sundry debtors- ₹100000
Provision for doubtful debts- ₹10000
Stock -₹50000
Furniture- ₹40000
Computers- ₹200000
Vehicle-₹200000

The goodwill of the firm is valued at ₹50000. Pass the journal entry for its adjustment.

C's Capital A/c   Dr.  ₹11667
       To A's Capital A/c          ₹8333
       To B's Capital A/c          ₹3334

Old ratio is 5:4:1
New ratio is 1:1:1
Sacrifice of B = Old share - New share
                     = 4/10 - 1/3
                      = (12-10)30
                      = 2/30
Gain of C = New share - old share
               = 1/3 -1/10
               = (10-3)30
               = 7/30
Sacrifice of A = Old share - New share
                     = 5/10 - 1/3
                      = (15-10)30
                      = 5/30
So, C will compensate both A and B IN THEIR SACRIFICING RATIO.
C's share in goodwill = 50000 X 7/30
                                  = 11667
A's share in goodwill = 50000 X 5/30
                                  = 8333
B's share in goodwill = 50000 X 2/30
                                  = 3334
So, journal entry will be-
C's Capital A/c   Dr.  ₹11667
       To A's Capital A/c          ₹8333
       To B's Capital A/c          ₹3334