A,B and C were partners sharing in the ratio 5:3:2.As on 1st Jan 2015 they decided to share the profits equally. on that date the goodwill of the firm was valued at Rs.40,000. There was a debit balance in the profit and loss account for Rs.15000 and the general reserve had a balance of Rs.30,000.Show the adjustments of these by means of a single entry.
Dear Student,
Old profit sharing Ratio is 5:3:2
New profit sharing Ratio is 1:1:1
So, Sacrificing Ratio/(Gaining Ratio) of
A is $\frac{5}{10}\frac{1}{3}=\frac{5}{30}$
B is $\frac{3}{10}\frac{1}{3}=\frac{1}{30}$\
C is $\frac{2}{10}\frac{1}{3}=\frac{4}{30}$
Thus A sacrificed whereas B & C gains 1:4 on change of Profit sharing Ratio.
Now Goodwill of the firm as on that date was valued at Rs 40,000
Share of A's Goodwill to be compensated by B & C is $40,000\times \frac{5}{10}=20,000$
Available profit = $15,000+30,000=15,000$
Thus total compensation to A by B & C is $20,000+15,000=35,000$
Regards,
Old profit sharing Ratio is 5:3:2
New profit sharing Ratio is 1:1:1
So, Sacrificing Ratio/(Gaining Ratio) of
A is $\frac{5}{10}\frac{1}{3}=\frac{5}{30}$
B is $\frac{3}{10}\frac{1}{3}=\frac{1}{30}$\
C is $\frac{2}{10}\frac{1}{3}=\frac{4}{30}$
Thus A sacrificed whereas B & C gains 1:4 on change of Profit sharing Ratio.
Now Goodwill of the firm as on that date was valued at Rs 40,000
Share of A's Goodwill to be compensated by B & C is $40,000\times \frac{5}{10}=20,000$
Available profit = $15,000+30,000=15,000$
Thus total compensation to A by B & C is $20,000+15,000=35,000$
Journal  
Date  Particulars  L.F.  Debit Amount (Rs) 
Credit Amount (Rs) 

1 Jan 2015  B's Capital A/c (1/5)  Dr.  7,000  
C's Capital A/c (4/5)  28,000  
To A's Capital A/c  35,000  
(Being Adjustment entry passed on change of profit sharing Ratio) 
Regards,