X, Y and Z are partners sharing profits and losses in the ratio of 5:3:2, decided to share future profits and losses equally with effect from 1st April, 2016. On that date, the goodwill appeared in the books at Rs.12,000. But it was revealed at Rs.30,000. Pass Journal entries assuming that no goodwill will appear the books of accounts.
working Notes :
1. Calculation of sacrificing (or Gaining) Ratio
Old Ratio (X,Y and Z) = 5: 3: 2
NEW Ratio to (X,Y and Z) 1:1:1
Sacrificing (or Gaining) Ratio =old Ratio - New Ratio
2.Writing of old Goodwill*
3. Adjustment of Goodwill
working Notes :
