Scribd
Upload
31 views3 pages

Goodwill Treatment in Partner Retirement

The document outlines the treatment of goodwill in accounting for retiring partners and the death of partners, detailing the necessary journal entries and accounts to be prepared. It includes guidelines for calculating gain ratios and adjusting partners' capital accounts. Additionally, it provides key points for solving related practical questions efficiently within a specified time frame.

Uploaded by

kvenkatagiriraju
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
31 views3 pages

Goodwill Treatment in Partner Retirement

The document outlines the treatment of goodwill in accounting for retiring partners and the death of partners, detailing the necessary journal entries and accounts to be prepared. It includes guidelines for calculating gain ratios and adjusting partners' capital accounts. Additionally, it provides key points for solving related practical questions efficiently within a specified time frame.

Uploaded by

kvenkatagiriraju
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

J. K. SHAH CLASSES S.Y.J.C.

- BOOK KEEPING & ACCOUNTANCY

Treatment of Goodwill

Firm’s Total Goodwill Retiring Partner’s Share

When Goodwill raised When Goodwill raised

Goodwill A/c. Dr. Goodwill A/c. Dr.


To All Partners’ Capital Current A/c. To Retiring Partners Capital A/c.

When Goodwill w/ff When Goodwill w/ff

Continuing Partners’ Capital A/c. Dr. Continuing Partners’ Capital A/c. Dr.

To Goodwill A/c. To Goodwill A/c.


(New PSR) (Gain Ratio)

Profit or Loss on Revaluation A/c.

Profit Loss

Revaluation A/c. Dr. All Partners’ Cap. A/c. Dr.


To All Partners’ Cap. A/c. To Revaluation A/c.

Settlement of Retiring Partner’s Capital

Retiring Partner’s Capital A/c.


Dr.
To Cash/Bank A/c. (If paid)
To Retiring Partner’s Loan A/c. (If not paid)

: 14 :
J. K. SHAH CLASSES S.Y.J.C.- BOOK KEEPING & ACCOUNTANCY
Bhool Na Jana:

1. Gain Ratio = New Ratio = Old Ratio

2. In case of total firm’s goodwill, no need to calculate Gain Ratio.

3. In absence of any information, to calculate New PSR, just remove share of


Retiring Partner.

4. When Continuing Partners decided to maintained their Reserves in books then


only Retiring Partner’s share of Reserve should be credited to his/her account.

Key to Solve this Question:

1. Question should be completed within 20-25 minutes.

2. Prepare Cash Account & Goodwill Account as a working note.

: 15 :
J. K. SHAH CLASSES S.Y.J.C.- BOOKKEEPING & ACCOUNTANCY

CHAPTER 5 DEATH OF PARTNER

Marks: Practical Question – 10


Objectives – 03 (with option)

Accounts to be prepared in order of closing:

Revaluation Account

Partners’ Capital Account

Balance Sheet (After Death of Partner)

Accounting Entries: (Same as Retirement of Partner)

Bhool Na Jana:

1. Gain Ratio = New Ratio = Old Ratio

2. In case of total firm’s goodwill, no need to calculate Gain Ratio.

3. In absence of any information, to calculate New PSR, just remove share of


Deceased Partner.

4. When partner died in between the accounting year

Adjustment 1st Effect 2nd Effect


Drawing Cap A/c – Dr. C/Bk - Cr.
Int. on Drawing Cap A/c – Dr. P/L susp - Cr.
Int. on Cap. Cap A/c –Cr. P/L susp - Dr.
Salary Cap A/c – Cr. P/L susp - Dr.
Share of profit Cap A/c – Cr. P/L s susp - Dr.

Key to Solve this Question:


1. Question should be completed within 20-25 minutes.

: 16 :

You might also like