question_answer

A, B, C, D and E were partners in a firm sharing profits and losses in the ratio of 5 : 4 : 3 : 2 : 1 respectively. Unfortunately, D and E met with a tragic car accident in which both of them died. The goodwill of the firm was valued at Rs. 1,50,000 and A, B and C decided to share the future profits and losses in the ratio of 4 : 6 : 5  respectively. Give the journal entries to record the above.

Answer:

Debit B and C by Rs. 20,000 each and credit E and A by Rs. 10,000 each and C by Rs. 20,000