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M.298 An Aid to Accountancy—CBSE XII

Working Notes:
1. Calculation of Sacrificing Ratio:
Sacrifice = Old Share – New Share
X sacrifices = 3/5 – 4/9 = 7/45; Y sacrifices = 2/5 – 3/9 = 3/45; Sacrificing Ratio = 7 : 3.
2. Adjustment of Goodwill:
`
`
`
È 90,000 + 78,000 + 75,000 ˘
Firm’s Goodwill = 2 Í Î 3 ˙ ˚ = ` 1,62,000
Z’s Share of Goodwill = ` 1,62,000 × 2/9 = ` 36,000, which will be distributed between X and Y in their
sacrificing ratio, i.e., 7 : 3.
Or
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 A’s Capital A/c ...Dr. 3,000
B’s Capital A/c ...Dr. 2,000
C’s Capital A/c ...Dr. 1,000
To Goodwill A/c 6,000
(Being the existing goodwill written off)
A’s Capital A/c ...Dr. 3,480
B’s Capital A/c ...Dr. 2,320
To C’s Capital A/c 5,800
(Being the C’s share of goodwill adjusted between gaining partners
A and B in their gaining ratio, i.e., 3 : 2)

Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Patents A/c 2,000 By Investment A/c 2,600
To Machinery A/c 5,000 By Creditors A/c 6,000
To Provision for Doubtful Debts A/c 400 By Loss transferred to:
To Bank A/c (Revaluation Expenses) 2,000 A’s Capital A/c 400
B’s Capital A/c 267
C’s Capital A/c 133 800
9,400 9,400

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To Goodwill A/c 3,000 2,000 1,000 By Balance b/d 68,000 32,000 21,000
To Advertisement By Workmen Compensation
Expenditure A/c 2,625 1,750 875 Reserve A/c 5,625 3,750 1,875
To Revaluation A/c 400 267 133 By Investment Fluctuation
To C’s Capital A/c 3,480 2,320 ... Reserve A/c 3,000 2,000 1,000
To Investment A/c ... ... 17,600 By A’s Capital A/c ... ... 3,480
To Bank A/c ... ... 5,067 By B’s Capital A/c ... ... 2,320
To C’s Loan A/c* ... ... 2,500
To Bills Payable A/c* ... ... 2,500
To Balance c/d 67,120 31,413 ...
76,625 37,750 29,675 76,625 37,750 29,675
*50% of ` 5,000 (i.e., ` 21,000 + ` 1,875 + ` 1,000 + ` 3,480 + ` 2,320 – ` 1,000 – ` 875 – ` 133 – ` 17,600 – ` 5,067).