Multiple choice

A, B and C were partners sharing profits in the ratio 5 : 4 : 1. 'A' retired and new ratio was decided as 3 : 7. Goodwill of the firm was valued at Rs. 1, 20,000. What should be the journal entry?

  1. C's capital a/c ___ Dr. 72,000 To A's capital a/c 60,000 To B's capital a/c 12,000

  2. C's capital a/c ___ Dr. 12,000 B's capital a/c ___ Dr. 48,000 To A's capital a/c 60,000

  3. A's capital a/c __ Dr. 60,000 B's capital a/c __ Dr. 12,000 To C's capital a/c 72,000

  4. C's capital a/c ___ Dr. 36,000 To A's capital a/c 30,000 To B's capital a/c 6,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

B's gain = 3/10 - 4/10 = - 1/10, i.e. 1/10 sacrifice and C's gain = 7/10 - 1/10 = 6/10 Gaining partner will debit and vice versa. Thus, this is the correct answer.

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