Question

A, B and C are partners sharing profits in the ratio 3:2:1. C retires and his share is taken equally by A and B. The goodwill of the firm is valued at Rs 60,000. Pass journal entry for goodwill adjustment without raising Goodwill A/c.

Hint:

When goodwill is adjusted without raising goodwill account, debit gaining partners and credit retiring partner in the gaining ratio.

Answer 1

Step 1: Calculate C's Share of Goodwill

\[ \text{C's share} = \frac{1}{6}, \quad \text{Total goodwill} = \text{Rs }60,000 \] \[ \Rightarrow \text{C's share} = \frac{1}{6} \times 60,000 = \text{Rs }10,000 \]

Step 2: A and B will Compensate C in their Gaining Ratio

Gaining ratio (equal gain): A : B = 1 : 1 

\[ \text{A’s compensation} = \frac{10,000}{2} = \text{Rs }5,000 \] \[ \text{B’s compensation} = \text{Rs }5,000 \]

Journal Entry (Without Raising Goodwill Account)

\[ \begin{array}{l} \text{A’s Capital A/c} \quad \text{Dr.} \quad \text{Rs }5,000 \\ \text{B’s Capital A/c} \quad \text{Dr.} \quad \text{Rs }5,000 \\ \quad \quad \text{To C’s Capital A/c} \quad \text{Rs }10,000 \end{array} \]

Final Answer:

\[ \boxed{\text{A and B compensate Rs 5,000 each to C’s Capital A/c for goodwill.}} \]