Ram, Laxman and Bharat who were sharing profits and losses

9 :-  Ram, Laxman and Bharat who were sharing profits and losses in the ratio of 5 : 3 : 2, decide to share profits and losses equally with effect from 1st April, 2025. The goodwill of the firm is valued at Rs 4,50,000. Goodwill is appearing in the books is at Rs 75,000.
Pass necessary journal entries to record the transaction.

Solution :-

WORKING NOTES :-

(i) Calculation of gaining/sacrificing share
Old ratio of Ram, Laxman and Bharat is 5:3:2
New ratio of Ram, Laxman and Bharat is 1:1:1
Ram = 5/10 – 1/3 = 5/30 (sacrifice)
Laxman = 3/10 – 1/3 = -1/30 (gain)
Bharat = 2/10 – 1/3 = -4/30 (gain)

(ii) Calculation of partner’s share in goodwill
Ram = 4,50,000 x 5/10 = Rs 75,000 (credit)
Laxman = 4,50,000 x 1/30 =  Rs 15,000 (debit)
Bharat = 4,50,000 x 4/30 = Rs 60,000 (debit)