7 :- X, Y and Z are partners sharing profits equally. They decided that in future Z will get 1/5th share in profits. On the day of change, Firm’s goodwill is valued at Rs 30,000. Give journal entry arising on account of change in Profit – sharing Ratio.

Solution :-

WORKING NOTES :-  

  • Calculation of sacrificing share of Z

Old share – New share =  1/3 – 1/5 = 2/15

  • Calculation of Z’s share of goodwill

Z’s share of goodwill = Total goodwill of the firm x his sacrificing share
                                 = 30,000 x 2/15
                                  = Rs 4,000
It will be brought in by X and Y in 1:1.