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 gains (profit) on revaluation stands at Rs 1,39,200. A and C agreed to pay him Rs 1,50,000 in full settlement of his claim. Record necessary journal entry for adjustment of goodwill if the new profit sharing ratio is decided at 5:3.
Solution :-
(a) Calculation of hidden goodwill
Amount agreed to be paid to B 1,50,000
Less: B’s capital after all adjustments (1,39,200)
HIDDEN GOODWILL OF B 10,800
(b) Calculation of gaining/sacrificing share
New share – old share
A = 5/8 – 4/9 = 45 – 32/72 = 13/72
C = 3/8 – 2/9 = 27 – 16/72 = 11/72
Thus, gaining ratio is 13:11
(c) Calculation of their share of goodwill
B’s share = Rs 10,800 (credit)
A’s share = 10,800 x 13/24 = Rs 5,850
C’s share = 10,800 x 11/24 = Rs 4,950