Question:
Ravi, Guru, Mani and Sonu were partners in a firm sharing profits in the
ratio of 2 : 2 : 2 : 1. On 31st January, 2023, Sonu retired. On Sonu’s retirement,
the Goodwill of the firm was valued at |1,40,000. The new profit sharing ratio
among Ravi, Guru and Mani was 5 : 5 : 1. Showing your workings clearly, pass
necessary Journal entry for the treatment of Goodwill in the books of the firm on
Sonu’s retirement without opening goodwill account.
Ravi, Guru, Mani and Sonu were partners in a firm sharing profits in the
ratio of 2 : 2 : 2 : 1. On 31st January, 2023, Sonu retired. On Sonu’s retirement,
the Goodwill of the firm was valued at |1,40,000. The new profit sharing ratio
among Ravi, Guru and Mani was 5 : 5 : 1. Showing your workings clearly, pass
necessary Journal entry for the treatment of Goodwill in the books of the firm on
Sonu’s retirement without opening goodwill account.
Show Hint
When adjusting goodwill, calculate the proportionate share for each partner based on the profit-sharing ratio before and after the change.
Updated On: Feb 5, 2025
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Solution and Explanation
Goodwill is distributed among the partners in their sacrificing or gaining ratios.
On Sonu’s retirement: \[ {Goodwill = rupee1,40,000} \]
Journal Entry:
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