8 :- P, Q and R were partners in a firm sharing profits in the ratio of 3:2:1. P died and the new profit-sharing ratio of Q and R was agreed to be equal. On P’s death, goodwill of the firm was valued at Rs 60,000.
Pass the necessary entries for the treatment of goodwill under the following conditions:-
(a) When goodwill does not exist in the books of account; and
(b) When goodwill exists in the books of accounts at Rs 30,000.
Solution :-
WORKING NOTES :-
(i) Calculation of gaining ratio of Q and R
Old ratio of P, Q and R is 3:2:1
P died
New profit sharing ratio of P and R is 1:1
Q = 1/2 – 2/6 = 1/6
R = 1/2 – 1/6 = 2/6
Therefore, gaining ratio of Q and R is 1:2
(ii) Calculation of partner’s share in goodwill
P died and the goodwill of the firm is Rs 60,000
P’s share in goodwill = 60,000 x 3/6 = Rs 30,000
Q and R will share it in their gaining ratio I.e, 1:2
Q will give = 30,000 x 1/3 = Rs 10,000
R will give = 30,000 x 2/3 = Rs 20,000