Question

Isha and Manish were partners in a firm sharing profits and losses in the ratio of 3 : 2. With effect from 1^st April, 2023, they agreed to share profits equally. On this date the goodwill of the firm was valued at ₹ 3,00,000. The necessary journal entry for the treatment of goodwill without opening Goodwill Account will be:

Options

• Date	Particulars	Dr. Amount (₹)	Cr. Amount (₹)
  2023 April, 1	Manish's Capital A/c   ...Dr.	30,000
  	To Isha's Capital A/c		30,000

• Date	Particulars	Dr. Amount (₹)	Cr. Amount (₹)
  2023 April, 1	Isha's Capital A/c   ...Dr.	30,000
  	To Manish's Capital A/c		30,000

• Date	Particulars	Dr. Amount (₹)	Cr. Amount (₹)
  2023 April, 1	Manish's Capital A/c   ...Dr.	3,000
  	To Isha's Capital A/c		3,000

• Date	Particulars	Dr. Amount (₹)	Cr. Amount (₹)
  2023 April, 1	Isha's Capital A/c   ...Dr.	3,000
  	To Manish's Capital A/c		3,000

Answer 1

Date	Particulars	Dr. Amount (₹)	Cr. Amount (₹)
2023 April, 1	Manish's Capital A/c   ...Dr.	30,000
	To Isha's Capital A/c		30,000

Explanation:

Isha's Old Share = `3/5`, New Share = `1/2`

Isha's Sacrifice = `3/5 − 1/2`

= `(6 - 5)/10`

= `1/10`

Manish's Old Share = `2/5`, New Share = `1/2`

Manisha's Gain = `1/2 - 2/5`

= `(5 - 4)/10`

= `1/10`

Hence, Manisha will compensate to Isha

₹ `3,00,000 xx 1/10`

= ₹ 30,000.