A, B & C are partners sharing profits and losses in the ratio of 4:3:2. B decides to retire and the goodwill of the firm is valued at ₹72000 on the retirement. Remaining partners decide to share the future profits and losses in ratio of 5:3.
Pass the journal entry for goodwill.
Answer & explanation
Correct answer: option 1
Old ratio is 4:3:2
B share is 3/9
Total G/W is 72000
B's share of goodwill is 72000*3/9= 24000
NEW RATIO IS 5:3
GAIN OF A= 5/8-4/9= 13/72
GAIN OF C = 3/8-2/9= 11/72
So, the gaining ratio is 13:11
So Debit the remaining partner according to their gain i.e. A= 24000*13/24 = 13000 and C= 24000*11/24= 110000 and credit B account with share of goodwill i.e.., 24000