Multiple choice

A, B and C decide to change their profit sharing ratio from 5 : 3 : 2 to 2 : 3 : 5. Goodwill of the firm is valued at Rs. 30000. What will be the entry?

  1. Debit C's capital and credit A's capital by Rs. 9000.

  2. Debit A's capital and credit C's capital by Rs. 9000.

  3. Debit B's capital and credit A's capital by Rs. 9000.

  4. Debit C's capital and credit B's capital by Rs. 9000.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Sacrifice made by A and gain to C is 3/10. Thus, gaining partner i.e. C will be debited and sacrificing partner i.e. A will be credited with 30000 x 3/10

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