A,B and C were partners in a firm sharing profits in the ratio 1:3:2 They decided that with effect - Accountancy - Reconstitution- Admission of a Partner

Question

A,B and C were partners in a firm sharing profits in the ratio
1:3:2 They decided that with effect from 1 April ,2016,they will
share profits in the ratio of 4:6:5 For this purpose the goodwill
of the firm is valued at the total of preceding three year's
profits The profits were:

Neha Arora · Accepted Answer

Dear Student,

Journal

Date

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

A’s Capital A/c
Dr

25,000

To B’s Capital A/c

25,000

(Adjusting entry)

Goodwill = 1,80,000 (1,40,000 + 1,20,000 - 80,000)
Reserves + Profits = 40,000 + 30,000 = 70,000
Total Amount to be Adjusted = 1,80,000 + 70,000 = 2,50,000

Gaining/Sacrificing Ratio

A=16-415=-330(gaining)B=36-615=330(sacrificing)C=26-515=NilDebit A by 25,000 & Credit B by 25,000 330×2,50,000

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	A’s Capital A/c	Dr.		25,000
	To B’s Capital A/c				25,000
	(Adjusting entry)