Question:
Annu, Bandhu, Sheelu and Golu were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2 : 1. On 1st April, 2025, they decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ₹ 4,00,000. Calculate gain or sacrifice of the partners on change in profit sharing ratio and pass a single adjustment journal entry for the treatment of goodwill.
Annu, Bandhu, Sheelu and Golu were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2 : 1. On 1st April, 2025, they decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ₹ 4,00,000. Calculate gain or sacrifice of the partners on change in profit sharing ratio and pass a single adjustment journal entry for the treatment of goodwill.
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On change in profit sharing ratio, sacrificing partners are compensated by gaining partners. Sacrifice/Gain = Old Ratio - New Ratio. Positive = Sacrifice, Negative = Gain. Adjustment entry: Dr. Gaining Partners, Cr. Sacrificing Partners.
Updated On: Feb 26, 2026
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Solution and Explanation
1. Calculation of Sacrifice/Gain:
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