Page No 6.56:
Question 16:
A, B and C are
partners sharing profits in the ratio of 3 : 2 : 1. B retired and the
new profitsharing ratio between A and C was 2 : 1. On B's
retirement, the goodwill of the firm was valued at ` 90,000. Pass necessary Journal
entry for the treatment of goodwill on B's retirement.
Answer:
Journal 

Particulars 
L.F. 
Debit Amount ` 
Credit Amount ` 

A’s Capital A/c 
Dr. 

15,000 

C’s Capital A/c 
Dr. 

15,000 

To B’s
Capital A/s 


30,000 

(Being Adjustment B’s share of
goodwill made) 



Working Notes:
WN 1 Calculation of Gaining Ratio
Old Ratio (A, B and C) = 3 : 2 : 1
B retires from the firm.
New Ratio (A and C) = 2 : 1
Gaining Ratio=New Ratio −
Old Ratio
A‘s share=2/3 3/6 =43/6=1/6
B‘s share= 1/3 1/6
=21/6=1/6
∴Gaining Ratio = 1 : 1
WN 2 Adjustment of Goodwill
Goodwill of the firm = `
90,000
B’s share of goodwill =90,000×2/3=30,000
This share of goodwill is to be debited to remaining Partners’ Capital
Accounts in their gaining ratio (i.e. 1 : 1).
A’s
and C’s capital will be debited =30,000×1/2=15000
Page No
6.57:
Question 17: 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 Amount ( `) 
Credit Amount ( `) 

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
Page No 6.57:
Question 18:
Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 :
2 : 1. Goodwill is appearing in the books at a value of ` 60,000. Pammy retires and at the time of
Pammy's retirement, goodwill is valued at ` 84,000. Hanny and Sunny decided to share future
profits in the ratio of 2 : 1. Record the necessary Journal entries.
Answer:
Journal 

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


Hanny’s Capital A/c 
Dr. 

30,000 


Pammy’s Capital A/c 
Dr. 

20,000 


Sunny’s Capital A/c 


10,000 


To Goodwill
A/c 



60,000 

(Being Old goodwill writtenoff in old ratio) 











Hanny’s Capital A/c 
Dr. 

14,000 


Sunny’s Capital A/c 
Dr. 

14,000 


To Pammy’s
Capital A/c 



28,000 

(Being Adjustment for goodwill in gaining ratio) 




Working Notes:
WN1: Calculation of Pammy’s
Share in Goodwill
Pammy's share=Firm's Goodwill×Pammy's Profit SharePammy's share
=84,000×26=28,000 to be borne by gaining partners in gaining ratio
WN2: Calculation of Gaining
Ratio
Gaining Ratio = New Ratio − Old Ratio
Hanny's gain=2/3−3/6=1/6
Sunny's gain=1/3−1/6=1/6
Gaining Ratio=1:1
Page No 6.57:
Question 19:
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 Amount ` 
Credit
Amount ` 


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
Page No 6.57:
Question 20:
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 Amount (`) 
Credit Amount (`) 








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
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Chapter6: Retirement of a partner  20212022
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