X and Y shared profits and losses in the ratio of 3 : 2. With effect from 1st April 2023, they decided to share profits equally. The goodwill of the firm was valued at ₹ 60,000. The adjustment entry will be:
X and Y shared profits and losses in the ratio of 3 : 2. With effect from 1st April 2023, they decided to share profits equally. The goodwill of the firm was valued at ₹ 60,000. The adjustment entry will be:
a) Dr. Y’s Capital A/c and Cr. X’s Capital A/c by ₹ 6,000
b) Dr. X’s Capital A/c and Cr. Y’s Capital A/c by ₹ 6,000
c) Dr. X’s Capital A/c and Cr. Y’s Capital A/c by ₹ 600
d) Dr. Y’s Capital A/c and Cr. X’s Capital A/c by ₹ 600
Anurag Pathak Changed status to publish May 5, 2023
Ans – a)
Explanation:-
Calculation of Gain/sacrifice of partners
X = 3/5 – 1/2 = 6 – 5/10 = 1/10 (Sacrifice)
Y = 2/5 – 1/2 = 4 – 5/10 = – 1/10 (gain)
Calculation of partners’ share in the goodwill
Goodwill of the firm ₹ 60,000
X’s share in goodwill = 60,000 × 1/10 = ₹ 6,000 (Credit)
Y’s share in goodwill = 60,000 × 1/10 = ₹ 6,000 (Debit)
Journal Entry
Y’s Capital A/c Dr. 6,000
To X’s Capital A/c 6,000
Anurag Pathak Changed status to publish May 3, 2023
