Commerce Exam > Commerce Questions > A, B and C were partners sharing profits and ...
Start Learning for Free
A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry?
Most Upvoted Answer
A, B and C were partners sharing profits and losses in the ratio of 1/...
Journal Entry:
Partners' Capital Accounts:
Partners Capital Accounts (Before C's Retirement):
A: X
B: Y
C: Z
Goodwill Adjustment:
The partners have decided to adjust C's share of goodwill in the accounts of A and B. Goodwill is an intangible asset that represents the reputation and customer base of a business. When a partner retires, the remaining partners may need to compensate the retiring partner for their share of goodwill.
Calculation of Goodwill:
To adjust C's share of goodwill, we need to calculate the value of C's share based on the ratio of their profits and losses. The ratio of profits and losses is given as 1/2:1/3:1/6 for A, B, and C respectively.
Let's assume the total profit or loss is P. Then,
A's share = (1/2) * P
B's share = (1/3) * P
C's share = (1/6) * P
Now, let's calculate the total value of C's share of goodwill:
Total value of C's share of goodwill = C's share * Ratio of future profits and losses (3:2)
= (1/6) * P * (3/2)
Adjustment Entry:
To adjust C's share of goodwill in the accounts of A and B, we need to transfer the calculated value of C's share to A and B's capital accounts.
The journal entry will be as follows:
A's Capital Account Dr.
B's Capital Account Dr.
To C's Capital Account
Explanation:
- A's Capital Account and B's Capital Account are debited to decrease their capital as they will be compensating C for their share of goodwill.
- C's Capital Account is credited to transfer their share of goodwill to A and B.
New Partner's Capital Ratios:
After adjusting the share of goodwill, the partners have decided to share future profits and losses in the ratio of 3:2. This means that the new capital ratios will be:
A: X + (Value transferred from C's goodwill)
B: Y + (Value transferred from C's goodwill)
Conclusion:
By adjusting C's share of goodwill in the accounts of A and B, the partners ensure a fair distribution of the intangible asset. This adjustment reflects the value of C's contribution to the business and allows for a smooth transition as C retires from the partnership. The new capital ratios reflect the revised ownership structure and will be used to distribute future profits and losses among the remaining partners.
Partners' Capital Accounts:
Partners Capital Accounts (Before C's Retirement):
A: X
B: Y
C: Z
Goodwill Adjustment:
The partners have decided to adjust C's share of goodwill in the accounts of A and B. Goodwill is an intangible asset that represents the reputation and customer base of a business. When a partner retires, the remaining partners may need to compensate the retiring partner for their share of goodwill.
Calculation of Goodwill:
To adjust C's share of goodwill, we need to calculate the value of C's share based on the ratio of their profits and losses. The ratio of profits and losses is given as 1/2:1/3:1/6 for A, B, and C respectively.
Let's assume the total profit or loss is P. Then,
A's share = (1/2) * P
B's share = (1/3) * P
C's share = (1/6) * P
Now, let's calculate the total value of C's share of goodwill:
Total value of C's share of goodwill = C's share * Ratio of future profits and losses (3:2)
= (1/6) * P * (3/2)
Adjustment Entry:
To adjust C's share of goodwill in the accounts of A and B, we need to transfer the calculated value of C's share to A and B's capital accounts.
The journal entry will be as follows:
A's Capital Account Dr.
B's Capital Account Dr.
To C's Capital Account
Explanation:
- A's Capital Account and B's Capital Account are debited to decrease their capital as they will be compensating C for their share of goodwill.
- C's Capital Account is credited to transfer their share of goodwill to A and B.
New Partner's Capital Ratios:
After adjusting the share of goodwill, the partners have decided to share future profits and losses in the ratio of 3:2. This means that the new capital ratios will be:
A: X + (Value transferred from C's goodwill)
B: Y + (Value transferred from C's goodwill)
Conclusion:
By adjusting C's share of goodwill in the accounts of A and B, the partners ensure a fair distribution of the intangible asset. This adjustment reflects the value of C's contribution to the business and allows for a smooth transition as C retires from the partnership. The new capital ratios reflect the revised ownership structure and will be used to distribute future profits and losses among the remaining partners.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry?
Question Description
A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry?.
A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry?.
Solutions for A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? defined & explained in the simplest way possible. Besides giving the explanation of
A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry?, a detailed solution for A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? has been provided alongside types of A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? theory, EduRev gives you an
ample number of questions to practice A, B and C were partners sharing profits and losses in the ratio of 1/2:1/3:1/6 respectively. C decided to retire and the partners decided to share the future profits and losses in the ratio of 3:2. It was decided that C's share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures in the following Journal entry? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup