Suresh, Ramesh and Tushar were partners of a firm sharing profits in the ratio of 6:5:4. Ramesh retired and his capital after making adjustments on account of reserves, revaluation of assets and reassessment of liabilities stood at ₹ 2,50,400. Suresh and Tushar agreed to pay him ₹ 2,90,000 in full settlement of his claim. Pass necessary journal entry for the treatment of goodwill. Show workings clearly.
Answer
| Calculation of hidden Goodwill | |
| Total Amount agreed to be paid to Suresh | = 290000 |
| Ramesh's Adjusted Capital | = 250400 |
| Ramesh's share of Goodwill (Hidden Goodwill) | = 39600 |
Goodwill will be shared in gaining ratio which is 3:2
| Date | Particulars | L.F | Dr (Amount) | Cr (Amount) | |
| Suresh's Capital A/c Dr | 23760 | (39600*3/5) | |||
| Tushar's Capital A/c Dr | 15840 | (39600*2/5) | |||
| To Ramesh's Capital A/c | 39600 | ||||
| (Ramesh's share of Goodwill adjusted in Gaining Ratio) |
Working Notes :-
Calculation of Gaining Ratio :-
Gaining Ratio = New profit Share - Old profit Share
Old Ratio = 6 : 5 : 4
New Ratio = 6 : 4
Suresh's Gain = 3/5 - 6/15 = 3/15
Tushar's Gain = 2/5 - 4/15 = 2/15