Partners X, Y and Z share profit in the ratio 3:2:1. On dissolution, goodwill is valued at Rs. 1,20,000 and is to be adjusted in the outgoing partners' capital accounts. Calculate the amount of goodwill to be credited to each partner’s capital account.
Answer
X – Rs. 60,000; Y – Rs. 40,000; Z – Rs. 20,000
The correct answer is X – Rs. 60,000; Y – Rs. 40,000; Z – Rs. 20,000 — Credit the respective amounts to X, Y and Z capital accounts.
Step-by-step solution
- Total goodwill = Rs. 1,20,000.
- Determine each partner’s share using the profit‑sharing ratio 3:2:1 (total parts = 3+2+1 = 6).
- X’s share = (3/6) × 1,20,000 = Rs. 60,000.
- Y’s share = (2/6) × 1,20,000 = Rs. 40,000.
- Z’s share = (1/6) × 1,20,000 = Rs. 20,000.
- Credit the respective amounts to X, Y and Z capital accounts.
Common mistake: Using incorrect ratio or forgetting to divide goodwill by total parts
Concept tested: Adjustment of goodwill on dissolution
Published · How this solution was prepared and checked
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