A, B and C are partners sharing Profit in the ratio 1:1:1. They decided to share their profits in 5:3:2 in future. For this purpose, the goodwill of the firm was valued at Rs 4,80,000. Pass the journal entry for the adjustment of goodwill.

 A's Capital A/c Dr   ₹80,000
          To B's Capital A/c        ₹16,000
          To C's Capital A/c        ₹64,000
(Adjustment of goodwill)

Gaining Ratio=New ratio-Old Ratio
A = 5/10 - 1/3 = 15/30 - 10 /30 = 5/30
B = 3/10 - 1/3 = 9/30 -10 /30 = (1/30)
C = 2/ 10 - 1/3 = 6/30 -10 /30 = (4/30)
Only Partner A is gaining. So he will compensate both B & C.
A - 4,80,000 * 5/30 = 80,000
B - 4,80,000 * 1/30 = (16,000)
C - 4,80,000 * 4/30 = ( 64,000)