A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. C retires and A and B agree to share future profits in the ratio of 6 : 4
A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. C retires and A and B agree to share future profits in the ratio of 6 : 4. Goodwill is to be taken at two year’s purchase of the average profits of the last 5 years, which were ₹ 10,000′ ₹ 25,000; ₹ 15,000 (Loss); ₹ 36,000 and ₹ 44,000 respectively.
At the date of C’s retirement, following balances appeared in the books of the firm:
You are required to record necessary journal entries in the books of the firm and prepare C’s Capital Account on his retirement.
[Ans. Amount due to C transferred to his Loan A/c ₹ 2,26,000.]
| ₹ | |
| General Reserve | 1,20,000 |
| Profit & Loss Account (Dr.) | 30,000 |
| C’s Capital | 2,00,000 |
Anurag Pathak Answered question 1 day ago
