A and B are partners sharing profits and losses in the ratio of 3 : 1. Their
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A and B are partners sharing profits and losses in the ratio of 3 : 1. Their capitals were : A —₹60,000; B ₹20,000. They decided to change the profit-sharing ratio to 5 : 3 with effect from 1.1.2018. The goodwill of the firms is to be valued at 2 years’ purchase of 3 years’ average profits. They also decided that their capitals should be proportionate to their profit-sharing ratio. The profits of the firms for 2015, 2016 and 2017 were ₹22,000; ₹28,000 and ₹34,000 respectively. Pass necessary Journal Entries. Also, show the Partners’ Capital Accounts.
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Related Book For 
Financial Accounting Volume II
ISBN: 9789387886230
4th Edition
Authors: Mohamed Hanif, Amitabha Mukherjee
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