20 :- Sohan, Ashish, Vishesh and Rashi were partners in a firm sharing profits and losses in the ratio of 4:3:2:1. With effect from 1st April,2023, they decided to share profits and losses in the ratio of 2:1:1:1. Their balance sheet showed a General Reserve of Rs 80,000. The goodwill of the firm was valued at Rs 5,00,000. Pass necessary Journal entries for the above on account of change in the profit – sharing ratio. Show your working clearly.
Solution :-
WORKING NOTES :-
- Calculation of their gaining/sacrificing ratio
Old ratio -New ratio
Sohan = 4/10 – 2/5 = 0 (No change)
Ashish = 3/10 – 1/5 = 1/10 (sacrifice)
Vishesh = 2/10 – 1/5 = 0 (no change)
Rashi = 1/10 – 1/5 = -1/10 (gain)
- Calculation of their share of goodwill
Ashish’s share of goodwill = 5,00,000 x 1/10 = Rs 50,000 (Cr.)
Rashi’s share of goodwill = 5,00,000 x 1/10 = Rs 50,000 (Dr.)