X, Y and Z are the partners in a firm sharing profits and losses in the ratio of2 : 2 : 1. On April 1, 2012, X retires from the firm. On that date, the goodwill of the firm appearing in the books is Rs 75,000. Y and Z decided to share future profits and losses in the ratio of1 : 2. Pass the necessary Journal entries.

1. Existing goodwill is written off 

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

X’s Capital A/c

Dr.

 

30,000

 

Y’s Capital A/c

Dr

 

30,000

 

Z’s Capital A/c

Dr

 

15,000

 

         To Goodwill A/c

 

 

75,000

(Existing goodwill is written off)

 

 

 

 

 

 

 

 

 

2. Retiring partner's share of goodwill is adjusted through continuing Partner's Capital Account 

Journal

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Z’s capital A/c

Dr.

 

35,000

 

 

To X’s Capital A/c

 

 

 

30,000

 

To Y’s Capital A/c

 

 

 

5,000

(Goodwill is adjusted through partner’s capital account)

 

 

 

 

 

 

 

 

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