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Partnership a/c help!!!!

The Dude (Specialist- Finance) (303 Points)

01 March 2009

A, B and C are partners sharing profits in the ratio 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B.

(a) Rs. 20,000 and Rs. 10,000.

(b) Rs. 8,000 and Rs. 4,000.

(d) Information is insufficient for any comment.

My question is that whether the remaining partners will contribute the retiring partner in the old ratio (2:1 between A and C above) or gaining ratio (1:3). I feel it is Gaining ratio but the naswer is given according to old ratio. According to me A and C will contribute Rs 3000 and Rs 9000 respectively.Plzzz help frndz.......

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6 Replies

adula... (student) (550 Points)
Replied 01 March 2009

the answer given is correct

12000/3

which gives 4000 which is C's contributions

4000X2 which gives 8000 which is A's contribution

cos the goodwill was 30,000 and when B retires 12K is extracted so they have to compensate Bs contribun FIRST

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Md Zoheb Khan (Sr. Asst. Manager) (279 Points)
Replied 01 March 2009

Unless new ratio is given Old Ratio is Gaining Ratio

Therfore A&C Shall Give Share of Goodwill to B in old/gaining ratio 2:I

A a/c Dr 8000

C a/c Dr 4000

To B a/c 12000

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The Dude (Specialist- Finance) (303 Points)
Replied 01 March 2009

So if the new ratio is given, should we take gaining ratio??

(Guest)

If new ratio is given then ,Gain ratio = New ratio -old ratio.

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anany goel (student) (119 Points)
Replied 01 March 2009

as the new ratio is not given in the question u have to assume it to be 2:1 and not 1:1 so the gaining ratio is 2:1 only and not what u are saying so it wd be A capital a/c dr 8000 C capital a/c dr 4000 to B capital a/c 12000

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bhoop (account) (99 Points)
Replied 02 March 2009

In the Question there is no new Profit & Loss ratio; so when B retires the new ratio will be 2:1 and goodwill of B's part will be divided in gaining ratio of A & C. So first of all we need to find out gaining ratio i.e.

Gaining ratio = New ratio - Old ratio

New ratio is 2:1

Old Ratio is 2:2:1

Now A's gaining ration is 2/3-2/5 = (10-6)/15 = 4/15

and C's gaining ratio is 1/3-1/5 = (5-3)/15=2/15

gaining ratio of A & C is 4:2 i.e. 2:1

Now we find out goodwill of B

B's goodwil is 30000*2/5 =12000

So A contribute in gaining ratio for B's goodwill = 12000*2/3=8000

and C contribute in gaining ratio for B's goodwill = 12000*1/3=4000

So Option 'b' is correct answer