A and B are partners sharing profits and losses in the ratio of 3 : 1. It was decided that with effect from 1st April, 2024 the profit sharing ratio will be 5 : 3
A and B are partners sharing profits and losses in the ratio of 3 : 1. It was decided that with effect from 1st April, 2024 the profit sharing ratio will be 5 : 3. Goodwill is to be valued at 2 year’s purchase of average of 3 year’s profits. The profits for the years ending 31st March 2022, 2023 and 2024 were ₹ 36,000, ₹ 32,000 and ₹ 40,000 respectively.
Pass the necessary journal entry for the treatment of goodwill.
[Ans. Debit B by ₹ 9,000 and Credit A by ₹ 9,000.]
Anurag Pathak Answered question July 16, 2024
