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The goodwill recorded in the books is ₹30,000, and the old partners A and B share profits in the ratio of 2:1. When the goodwill is written off from the books, what amount will be debited to A’s Capital Account?

Answer and explanation

Correct answer: ₹20,000

Existing goodwill is written off in the old profit-sharing ratio. Therefore, the amount debited to A’s account is ₹30,000 × 2/3 = ₹20,000. ₹10,000 is B’s share, so it is not the amount borne by A. Exam tip: When existing goodwill is written off, debit the old partners’ Capital or Current Accounts in the old ratio.

Related tags

AccountancyGoodwill SettlementRetirement Of PartnerOld Profit Sharing RatioPartnership AccountsReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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