23 :- A, B and C were partners in a firm sharing profits in the ratio of 6:5:4. Their capitals were – Rs 1,00,000; B – Rs 80,000 and C – Rs 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 Rs 1,80,000. Showing your calculations clearly, pass the necessary journal entry for the treatment of goodwill on A’s retirement.
Solution :-
WORKING NOTES :-
(a) Calculation of gaining/sacrificing share
New ratio – old ratio
B = 1/5 – 5/15 = -2/15 (sacrifice)
C = 4/5 – 4/15 = 8/15 (gain)
B sacrifices and C gains
(b) Calculation of share of goodwill
B’s share of goodwill = 1,80,000 x 2/15 = Rs 24,000 (credit)
A’s share of goodwill = 1,80,000 x 6/15 = Rs 72,000 (credit)
C’s share of goodwill = 1,80,000 x 8/15 = Rs 96,000 (debit)