A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1.  A and C decided to retire from the firm. The goodwill of the firm was valued at ₹ 90,000. B and D decided to share future profits in the ratio of 5 : 3

A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1.  A and C decided to retire from the firm. The goodwill of the firm was valued at ₹ 90,000. B and D decided to share future profits in the ratio of 5 : 3.

Pass necessary journal entry for the treatment of goodwill.

[Ans. Debit B by ₹ 26,250 and D by ₹ 18,750; and Credit A by ₹ 30,000 and C by ₹ 15,000.]