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18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.?
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18 (A). P, Q and R are equal partners. Goodwill is appearing in their ...
Journal Entries for Retirement of a Partner and Revaluation of Goodwill
There are certain journal entries that need to be passed in the books of the firm when a partner retires and there is a revaluation of goodwill. The following are the necessary journal entries:
Step 1: Revaluation of Goodwill
The first step is to revalue the goodwill of the firm. In this case, the value of goodwill has decreased from 400000 to 2,50,000 due to the retirement of Partner R. The journal entry for revaluation of goodwill is:
Goodwill A/C Dr. 150000
To Partner R's Capital A/C 150000
Step 2: Treatment of Retiring Partner's Capital Account
The next step is to close the retiring partner's capital account. The balance in the partner's capital account needs to be transferred to his/her loan account. The journal entry for the same is:
Partner R's Capital A/C Dr. (balance in the account)
To Partner R's Loan A/C (transfer of balance to loan account)
Step 3: Adjusting the Remaining Partners' Capital Accounts
The last step is to adjust the remaining partners' capital accounts to reflect the change in the value of goodwill. The journal entry for the same is:
P and Q's Capital A/C Dr. 83333.33 each (1/3rd of the decrease in goodwill)
To Goodwill A/C 250000
This entry will decrease the capital balances of P and Q and increase the goodwill account.
In conclusion, the above journal entries need to be passed in the books of the firm to record the retirement of a partner and the revaluation of goodwill. The entries will help in maintaining the accuracy of the books of accounts and ensure that the remaining partners' capital accounts and the goodwill account are adjusted correctly.
There are certain journal entries that need to be passed in the books of the firm when a partner retires and there is a revaluation of goodwill. The following are the necessary journal entries:
Step 1: Revaluation of Goodwill
The first step is to revalue the goodwill of the firm. In this case, the value of goodwill has decreased from 400000 to 2,50,000 due to the retirement of Partner R. The journal entry for revaluation of goodwill is:
Goodwill A/C Dr. 150000
To Partner R's Capital A/C 150000
Step 2: Treatment of Retiring Partner's Capital Account
The next step is to close the retiring partner's capital account. The balance in the partner's capital account needs to be transferred to his/her loan account. The journal entry for the same is:
Partner R's Capital A/C Dr. (balance in the account)
To Partner R's Loan A/C (transfer of balance to loan account)
Step 3: Adjusting the Remaining Partners' Capital Accounts
The last step is to adjust the remaining partners' capital accounts to reflect the change in the value of goodwill. The journal entry for the same is:
P and Q's Capital A/C Dr. 83333.33 each (1/3rd of the decrease in goodwill)
To Goodwill A/C 250000
This entry will decrease the capital balances of P and Q and increase the goodwill account.
In conclusion, the above journal entries need to be passed in the books of the firm to record the retirement of a partner and the revaluation of goodwill. The entries will help in maintaining the accuracy of the books of accounts and ensure that the remaining partners' capital accounts and the goodwill account are adjusted correctly.
Community Answer
18 (A). P, Q and R are equal partners. Goodwill is appearing in their ...
1.) P's capital A/c dr. 133333
Q's capital A/c dr. 133333
R's capital A/c dr. 133334
To Goodwill A/c 400000
2.) P's capital A/c dr. 125000
Q's capital A/c dr. 125000
To R's capital A/c 250000
Q's capital A/c dr. 133333
R's capital A/c dr. 133334
To Goodwill A/c 400000
2.) P's capital A/c dr. 125000
Q's capital A/c dr. 125000
To R's capital A/c 250000
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18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.?
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18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about 18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.?.
18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about 18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 18 (A). P, Q and R are equal partners. Goodwill is appearing in their booksat 400000. R retires and on the day of R's retirement Goodwill is valued at 2,50,000. Pass the necessary journal entries.?.
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