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A, B and C were partners in a firm sharing profits in the ratio of 6 : 5 : 4. Their capitals were A – ₹ 1,00,000; B – ₹ 80,000 and C – ₹ 60,000 respectively. On 1st April, 2009, A retired from the firm and the new profit sharing ratio between B and C was decided as 1 : 4. On A’s retirement, the goodwill of the firm was valued at ₹ 1,80,000. Showing your calculations clearly, pass the necessary journal entry for the treatment of goodwill on A’s retirement. |
| Answer» NOTES: WN1: Calculation of Gaining RATIO A :B :C = 6:5:4 (Old ratio)B :C = 1:4 (NEW ratio)Gaining Ratio = New Ratio - Old RatioWN2: Calculation of Retiring Partner’s Share of GOODWILL A's and B's share of goodwill be brought by C only.Therefore, C's Capital A/c will be debited with 72,000+24,000 = RS 96,000. | |