Question : A, B and C were partners sharing profits in the ratio of 2: 3: 4. On 15th March 2018 B died and the new profit-sharing ratio of A and C was 5: 4. On B's death the goodwill of the firm was valued at Rs.75,000. Choose the correct Journal entry with respect to the treatment of goodwill.
Option 1: Debited A and Credited B Rs 25,000
Option 2: Credited A and debited B Rs 25,000
Option 3: Debited B and Credited C Rs 25,000
Option 4: Debited A Rs 12,500, debited C Rs 12,500 and Credited B Rs 25,000
Correct Answer: Debited A and Credited B Rs 25,000
Solution :
Answer =
Debited A and Credited B Rs 25,000
G.Ratio= N.R- O.R
A= $\frac{5}{9}$-$\frac{2}{9}$= $\frac{3}{9}$.
C= $\frac{4}{9}$-$\frac{4}{9}$= 0.
A's capital a/c.....Dr 25,000
To B's capital a/c 25,000(75000×$\frac{3}{9}$).
Hence, the correct option is 1.
