Question

Kartik, Inder and Lalit were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. With effect from 1st April, 2024, they decided to share profits and losses in the ratio of 2 : 3 : 4. For this purpose, the goodwill of the firm was valued at ₹ 1,80,000. The necessary journal entry to show the effect of the above will be :

• A. Lalit’s Capital A/c Dr. 40,000
  To Kartik’s Capital A/c 40,000
• B. Kartik’s Capital A/c Dr. 40,000
  To Lalit’s Capital A/c 40,000
• C. Lalit’s Capital A/c Dr. 1,80,000
  To Kartik’s Capital A/c 1,80,000
• D. Kartik’s Capital A/c Dr. 1,80,000
  To Lalit’s Capital A/c 1,80,000

Hint:

Always compare new and old ratios to identify sacrifice and gain. Goodwill is adjusted accordingly between the partners.

Answer 1

The Correct Option is A

Step 1: Old Ratio = 4 : 3 : 2
New Ratio = 2 : 3 : 4
Calculate sacrifice/gain: \[ \text{Kartik’s Gain} = 2/9 - 4/9 = -2/9\ (\text{sacrifice})
\text{Lalit’s Gain} = 4/9 - 2/9 = 2/9 \] Only Kartik is sacrificing and Lalit is gaining. Step 2: Goodwill to be adjusted between gaining and sacrificing partners.
Kartik sacrifices ₹ 40,000; Lalit gains the same amount.