Question 16: Aman,
Bimal and Deepak are partners sharing profits in the
ratio of 2: 3: 5. The goodwill of the firm has been valued at `37,500. Aman
retired. Bimal and Deepak decided to share profits
equally in future.
Calculate
gain/sacrifice of Bimal and Deepak on Aman's retirement and also pass necessary Journal entry for
the treatment of goodwill. (CBSE 2019)
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit (`) 
Credit (`) 

Bimal’s capital
a/c 
Dr. 
7,500 


To Amal’s capital a/c 
7,500 


(Being Goodwill adjusted) 







Working notes;
WN1
Calculation of gaining and sacrificing ratio

Amal

Bimal

Deepak

Old ratio

2 :

3 :

5

New ratio

Retires

1 :

1

Bimal = 3/101/2=35/10= 2/10
Deepak =5/101/2=55/10= 0/10
Gaining ratio of Sunil and David=13:11
WN2
Firms goodwill =37,500
Share of retiring partner Amal is 2/10
Share of Amal share =37,500×2/10=7,500
Bimal will compensate 7,500
Question 17:
A, B and C are partners sharing profits in
the ratio of 4/9 : 3/9 : 2/9. B retires and
his capital after making adjustments for reserves and gain (profit) on
revaluation stands at
`
1,39,200. A and C agreed to pay him ` 1,50,000 in full settlement of
his claim. Record necessary Journal entry for adjustment of goodwill if the new
profitsharing ratio is decided at 5 : 3.
Answer:
Journal 


Date 
Particulars 
L.F. 
Debit ` 
Credit ` 


A’s Capital A/c 
Dr. 

5,850 



C’s Capital A/c 
Dr. 

4,950 



To B’s Capital A/c 



10,800 


(Being Adjustment of B’s share of goodwill) 





Working Notes
i. Calculation of B’s share of goodwill
A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him ` 1,50,000
B’s capital after making necessary adjustments ` 1,39,200
Therefore, Hidden Goodwill is ` (1,50,000 –
1,39,200) i.e. ` 10,800
ii
Gaining Ratio
New
profit sharing ratio between A and B is 5:3
A's Gain=5/85/9=13/72
C's Gain=3/82/9=11/72
Gaining ratio
13:11
Thus,
B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11
i.e.
A’s capital will be debited =10,800×13/24=5850
C’s capital will be debited
=10,800×11/24=4950
Question 18: Shivam, Kapil
and Deepak are partners sharing profits in the ratio of 3:1:2. On 31st March, 2023,
Kapil retired and his capital account after
adjustments of reserve and profit on revaluation was ` 3,50,000. Shivam and Deepak paid him ` 4,20,000 in settlement of
his claim. To settle his account, a computer of ` 4,20,000
was given to Kapil. Pass the necessary Journal
entries in the books of the firm.
Answer:
Date 
Particulars 

` 
` 
1. 
Shivam’s Capital A/c 
Dr. 
42,000 


Deepak’s Capital A/c 
Dr. 
28,000 


To Kapil’s Capital A/c 


70,000 

(Kapil was compensated for his share of goodwill ) 



2. 
Kapil’s Capital A/c 
Dr. 
4,20,000 


To Computer A/c 


4,20,000 

(Computer was paid in consideration of Capital) 



Working notes:
Kapil’s capital (after
adjustments of reserve and profit on revaluation) 
= 
`
3,50,000 
Less: Shivam and Deepak paid him capital in settlement of his claim 
= 
`
4,20,000 
Hidden Goodwill (Share of Kapil in Goodwill) 
= 
` 70,000 
Shivam and Deepak Pay in 3:2
Shivam = 70,000 × 3/5= 42,000
Deepak = 70,000 × 2/5= 28,000
Question 19:
M, N and O
are partners in a firm sharing profits in the ratio of 3 :
2 : 1. Goodwill has been valued at ` 60,000. On N's
retirement, M and O agree to share profits equally. Pass the
necessary Journal entry for treatment of N's share of goodwill.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit (`) 
Credit (`) 








O’s
Capital A/c 
Dr. 

20,000 


To N’s Capital A/c 



20,000 

(Being Adjustment of N’s share of goodwill) 









Working Notes:
WN1:Calculation
of Gaining Ratio
M :N :O=3:2:1(Old ratio)
M :O =1:1(New ratio)
Gaining Ratio = New Ratio  Old Ratio
M's Gain =1/2−3/6=3−3/6=0
O's Gain=1/2−1/6=3−1/6=2/6
WN2: Calculation of Retiring Partner’s Share of Goodwill
N's share of goodwill=60,000×2/6=` 20,000
N's share of goodwill will be brought by O only.
Therefore, O's Capital A/c will be debited with ` 20,000
Question 20:
A, B, C and D are partners in a
firm sharing profits, in the ratio of 2 : 1 : 2 : 1.
On the retirement of C, Goodwill was valued ` 1,80,000. A, B
and D decide to share future profits equally. Pass the necessary
Journal entry for the treatment of goodwill.
Answer:
Journal 

Date 
Particulars 
L.F. 
Debit (`) 
Credit (`) 


B’s
Capital A/c 
Dr 

30,000 


D’s
Capital A/c 
Dr. 

30,000 


To C’s Capital A/c 



60,000 

(Being Adjustment of C’s share of goodwill) 









Working Notes:
WN1:Calculation
of Gaining Ratio
A :B :C :D=2:1:2:1(Old ratio)
A :B :D =1:1:1(New ratio)
Gaining Ratio = New Ratio  Old Ratio
A's Gain =1/3−2/6=2−2/6=0
B's Gain =1/3−1/6=2−1/6=1/6
D's Gain =1/3−1/6=2−1/6=1/6
A:B:D=0:1:1
WN2: Calculation of Retiring Partner’s Share of Goodwill
C's share of goodwill=1,80,000×2/6=` 60,000
C's share of goodwill will be brought by B and D in their gaining ratio1:1
Therefore, B's Capital A/c will be debited with 60,000×1/2=` 30,000
And, D's Capital A/c will be debited with 60,000×1/2=` 30,000
Ts Grewal Solution 20232024
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Class 12 / Volume – I