Change in profit sharing ratio

1. Change in Profit Sharing Ratio
Treatment of Goodwill

2. 1. Calculation of goodwill (if it is not given)
2. Sacrificing and Gaining share
3. Decide partner to be debited and to be
credited
4. Calculate Goodwill x Sacrificing share or
Gaining share
5. Pass journal entry

3. 1
Asha, Nisha and Disha shared profits and
losses in the ratio of 3:2:1 respectively. With
effect from 1st April 2022, they agreed to
share profits equally. The goodwill of the firm
was valued at Rs.18,000. Pass necessary
journal entries to record the above change.

4. Step 1
Sacrificing or Gaining Ratio = OS – NS
Asha =
Nisha =
Disha =

5. Step 1
Sacrificing or Gaining Ratio = OS – NS
Asha = 3/6 – 1/3 = 3-2 = 1/6 (S)
Nisha = 2/6 – 1/3 = 2-2 = 0
Disha = 1/6 – 1/3 = 1-2/6 = -1/6 (G)

6. Step 1
Sacrificing or Gaining Ratio = OS – NS
Asha = 3/6 – 1/3 = 3-2 = 1/6 (S) = 18000x1/6=3,000 (Cr)
Nisha = 2/6 – 1/3 = 2-2 = 0
Disha = 1/6 – 1/3 = 1-2/6 = -1/6 (G)=18000x1/6 = 3,000 (Dr)

7. Journal
Disha’s capital a/c Dr 3,000
To Asha’s capital 3,000
(Adjustment entry for goodwill)

9. Calculation of Goodwill
AP
= 70,000 + 75,000 + 55,000 + 35,000 + (10,000) / 5
= 45,000
Goodwill = 45,000 x 2 = 90,000

10. Sacrificing and Gaining ratio
SS or GS = OS – NS
OS = 5:3:2, New share = 1:1:1
X = 5/10 – 1/3 = 15-10/30 = 5/30 (S)
Y = 3/10 – 1/3 = 9-10/30 = -1/30(G)
Z= 2/10 – 1/3 = 6-10/30 = -4/30(G)

11. Sacrificing and Gaining ratio
SS or GS = OS – NS
OS = 5:3:2, New share = 1:1:1
X = 5/10 – 1/3 = 15-10/30 = 5/30 (S)=90000x 5/30 = 15,000Cr
Y = 3/10 – 1/3 = 9-10/30 = -1/30(G)=90000x1/30= 3000 Dr
Z= 2/10 – 1/3 = 6-10/30 = -4/30(G) = 90000 x 4/30 =12,000 Dr

12. Journal entry
Y’s capital a/c Dr 3,000
Z’s capital a/c Dr 12,000
To X’s capital a/c 15,000
(Adjustment entry for Goodwill)

14. Mandeep Vinod Abbas 3:2:1
New profit sharing ratio 1:1:1 (equal)
Goodwill = 3 years purchase of average profit of
last five years
2018 Rs.1,00,000
2019 Rs.1,50,000
2020 Rs.50,000 Loss
2021 Rs.2,00,000
2022 Rs.2,00,000
Pass the journal entry showing the working.

15. Calculation of Goodwill
AP =
100000+150000+(50000)+200000+200000/5
= 6,00,000/5 = 1,20,000
Goodwill = 3 x 1,20,000 = 3,60,000

16. Calculation of sacrificing and Gaining
ratio
Mandeep = 3/6 – 1/3 = 3-2=1/6 (S)
Vinod = 2/6 – 1/3 = 0
Abbas = 1/6 – 1/3 = 1-2 = -1/6 (G)

17. Calculation of sacrificing and Gaining
ratio
Mandeep = 3/6 – 1/3 = 3-2=1/6 (S)
3,60,000 x 1/6 = 60,000 Cr
Vinod = 2/6 – 1/3 = 0
Abbas = 1/6 – 1/3 = 1-2 = -1/6 (G)
3,60,000 x 1/6 = 60,000 Dr

18. Journal
Abbas’ Capital a/c Dr 60,000
To Mandeep’s capital a/c 60,000
(adjustment entry for Goodwill)

20. Find the Square root of
3025 and
9025

21. Match the company with
their share price

22. Sno Stock CMP
1 Reliance 1180
2 M&M 9859
3 Tata Motors 3222
4 Axis Bank 661
5 Power Grid Corp 7766
6 Bajaj Finance 262
7 HDFC Life 980
8 Eicher Motors 600
9 Maruti Suzuki 1548

23. Sno Stock CMP
1 Reliance 2638
2 M&M 1548
3 Tata Motors 600
4 Axis Bank 980
5 Power Grid Corp 262
6 Bajaj Finance 7766
7 HDFC Life 661
8 Eicher Motors 3222
9 Maruti Suzuki 9859

24. Unscramble the business terms

25. G N E D A A

26. E C O N I C S

27. R I S S C I

28. T I S S U E C O M

29. M O N C I C E O

30. L L B G O A

31. D O C T A R I I N

32. A N T I G E M U D

33. G N R A C I O

34. M A N D R O

35. Business related movies

36. The Social _________

37. Wall ________

38. Office ______

39. Boiler ______

40. Margin ______

41. Too big to ______

42. Two minutes drawing
50 points

44. Major scales

45. Minor scales