A, B and C were partners in a firm sharing profits in 3:2:1 ratio The firm closes its books - Accountancy - Reconstitution- Retirement/Death of a Partner

Question

A, B and C were partners in a firm sharing profits in 3:2:1 ratio
The firm closes its books on 31st March every year B
died on 12-06-2007 On B’s death the goodwill of the firm was
valued at Rs 60000 On B’s death his share in the profit of
the firm till the time of his death was to be calculated on the
basis of previous years which was Rs 150000 Calculate B’s
share in the profit of the firm Pass journal entries for the
treatment of goodwill and B’s share of profit at the time of
his death

Neha A. · Accepted Answer

Swarnima,

The answer given by Rahul is absolutely correct Refer to the
working notes as given by him and for Journal entries, refer the
solution below

Journal

Date
Particulars
L F
Debit
Amount
(Rs)
Credit
Amount
(Rs)

A’s Capital A/c
Dr

15,000

C’s Capital A/c
Dr

5,000

To B’s Capital A/c

20,000

(Continuing partners compensate the outgoing
partner for his share of goodwill in gaining
ratio)

Profit and Loss Suspense A/c
Dr

10,000

To B’s Capital A/c

10,000

(B’s share in profit dispensed through
Profit and Loss Suspense A/c)

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	A’s Capital A/c	Dr.		15,000
	C’s Capital A/c	Dr.		5,000
	To B’s Capital A/c				20,000
	(Continuing partners compensate the outgoing partner for his share of goodwill in gaining ratio)

	Profit and Loss Suspense A/c	Dr.		10,000
	To B’s Capital A/c				10,000
	(B’s share in profit dispensed through Profit and Loss Suspense A/c)