Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3: 2: 1. From 1st April, 2022 they decided to share profits equally. The Partnership Deed provides that in the event of any change in profit-sharing ratio, goodwill shall be valued at three years' purchase of average profit of last five years. The profits and losses of past five years are: Profit: Year ended 31st March, 2018: Rs. 1,00,000; 2019: Rs. 1,50,000; 2021: Rs. 2,00,000; 2022: Rs. 2,00,000. Loss: Year ended 31st March, 2020: Rs. 50,000. Pass the Journal entry showing the working.

Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3: 2: 1. From 1st April, 2022 they decided to share profits equally. The Partnership Deed provides that in the event of any change in profit-sharing ratio, goodwill shall be valued at three years’ purchase of average profit of last five years. The profits and losses of past five years are: Profit: Year ended 31st March, 2018: Rs. 1,00,000; 2019: Rs. 1,50,000; 2021: Rs. 2,00,000; 2022: Rs. 2,00,000. Loss: Year ended 31st March, 2020: Rs. 50,000. Pass the Journal entry showing the working.

Post category:Accountancy
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