P Q and R are partners sharing profits and loses in the ratio of 5:3:2. Q retires and the goodwill of the firm is valued at RS. 9000. Assuming that P and R will share the future profit in the ratio of 4:1. Pass the necessary journal entries in a each of the following cases:
i) when no goodwill account appears in the books
ii) when goodwill appears at RS.30000 in the balance sheet.
hi here is the answer to your question......
journal entries
date particular amount dr amount cr
(1) p's capital a/c dr 15000
q's capital a/c dr 9000
r's capital a/c dr 6000
to goodwill a/c 30000
(being existing goodwill written off
in the old ratio)
(2) p's capital a/c dr 2700
to q's capital a/c dr 2700
(being q's share of goodwill debited to p's capital a/c)
working note.
q share of goodwill=9000*3/10=2700
p's gain=5/10-4/5= -3/10
r's gain= 2/10-1/5=0.
since r is not gaining on q's retirment and only p is gaining, so p's capital a/c will be debited with 2700 and q's capital will be credited with 2700. HOPE IT HELPS
journal entries
date particular amount dr amount cr
(1) p's capital a/c dr 15000
q's capital a/c dr 9000
r's capital a/c dr 6000
to goodwill a/c 30000
(being existing goodwill written off
in the old ratio)
(2) p's capital a/c dr 2700
to q's capital a/c dr 2700
(being q's share of goodwill debited to p's capital a/c)
working note.
q share of goodwill=9000*3/10=2700
p's gain=5/10-4/5= -3/10
r's gain= 2/10-1/5=0.
since r is not gaining on q's retirment and only p is gaining, so p's capital a/c will be debited with 2700 and q's capital will be credited with 2700. HOPE IT HELPS