Commerce Exam > Commerce Questions > A and B and C are partners sharing profits in...
Start Learning for Free
A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.?
Most Upvoted Answer
A and B and C are partners sharing profits in the ratio 3:2:1. C retir...
B's capital a/c Dr. 40,000
To C capital a/c 40,000
To C capital a/c 40,000
Community Answer
A and B and C are partners sharing profits in the ratio 3:2:1. C retir...
Journal Entries for Goodwill on C's Retirement
1. Valuation of Goodwill:
On C's retirement, the firm needs to value the goodwill. The given information states that the goodwill of the firm was valued at Rs 2,40,000 on the retirement date (1 April, 2018). To record this, the following journal entry is made:
Goodwill Account Dr. 2,40,000
To C's Capital Account 2,40,000
2. Adjustment of Partner's Capital:
As C is retiring from the firm, his capital needs to be adjusted. The existing capital accounts of A, B, and C are in the ratio of 3:2:1. Since A and B will continue to run the business and share future profits equally, their new capital ratio will be 1:1. To adjust the capital accounts, the following journal entry is made:
C's Capital Account Dr. (3/6 * 2,40,000) = 1,20,000
To A's Capital Account (3/5 * 1,20,000) = 72,000
To B's Capital Account (2/5 * 1,20,000) = 48,000
3. Distribution of Goodwill:
The goodwill needs to be distributed among the remaining partners, A and B, in the new profit-sharing ratio. As A and B will share future profits equally, their new profit-sharing ratio will be 1:1. To distribute the goodwill, the following journal entry is made:
Goodwill Account Dr. 2,40,000
To A's Capital Account 1,20,000
To B's Capital Account 1,20,000
4. Adjustment of Cash:
If the retiring partner, C, is paid any cash for his share in the goodwill, it needs to be adjusted. However, no information is given regarding the payment of cash to C. Hence, we assume that no cash is paid to C. If any cash is paid, an appropriate journal entry needs to be made to adjust the cash account.
This completes the necessary journal entries to give effect to the goodwill on C's retirement, raising the goodwill at its current value.
1. Valuation of Goodwill:
On C's retirement, the firm needs to value the goodwill. The given information states that the goodwill of the firm was valued at Rs 2,40,000 on the retirement date (1 April, 2018). To record this, the following journal entry is made:
Goodwill Account Dr. 2,40,000
To C's Capital Account 2,40,000
2. Adjustment of Partner's Capital:
As C is retiring from the firm, his capital needs to be adjusted. The existing capital accounts of A, B, and C are in the ratio of 3:2:1. Since A and B will continue to run the business and share future profits equally, their new capital ratio will be 1:1. To adjust the capital accounts, the following journal entry is made:
C's Capital Account Dr. (3/6 * 2,40,000) = 1,20,000
To A's Capital Account (3/5 * 1,20,000) = 72,000
To B's Capital Account (2/5 * 1,20,000) = 48,000
3. Distribution of Goodwill:
The goodwill needs to be distributed among the remaining partners, A and B, in the new profit-sharing ratio. As A and B will share future profits equally, their new profit-sharing ratio will be 1:1. To distribute the goodwill, the following journal entry is made:
Goodwill Account Dr. 2,40,000
To A's Capital Account 1,20,000
To B's Capital Account 1,20,000
4. Adjustment of Cash:
If the retiring partner, C, is paid any cash for his share in the goodwill, it needs to be adjusted. However, no information is given regarding the payment of cash to C. Hence, we assume that no cash is paid to C. If any cash is paid, an appropriate journal entry needs to be made to adjust the cash account.
This completes the necessary journal entries to give effect to the goodwill on C's retirement, raising the goodwill at its current value.
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
|
|
Top Courses for CommerceView all
A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.?
Question Description
A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.?.
A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.?.
Solutions for A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? 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 and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? defined & explained in the simplest way possible. Besides giving the explanation of
A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.?, a detailed solution for A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? has been provided alongside types of A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? theory, EduRev gives you an
ample number of questions to practice A and B and C are partners sharing profits in the ratio 3:2:1. C retired from firm on 1 April,2018 on which date goodwill of the firm was valued at Rs 2,40,000. A and B decided to share future profits equally from that date. Pass necessary Journal entries giving effect to goodwill on C's retirement raising goodwill at its current value.? 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