A ,

B ,
C has a partnership , capital accounts of A ,
B & C are as follows
,

A : E 50
, 000

B :
240
, 000

C : f 30
, 000

Over the years ,

the partnership has
generated goodwill amounting to 260
, 000

for 2 : 1
profit-sharing
The ratio A ,
B & C was 3 :

After some time C has decided to leave the partnership & the new
profit sharing ratio for A & B is 2 /
:
,

Since PSR Goodwill has to be recalculated

,
there was a
change in ,

Goodwill is not included in capital normally ,

so when
recalculating goodwill is first added back ,
in

Dr Goodwill 60 , 000

Cr Capital all , 000

60

Capital
A B C A B C

bid , 00040, 000

50 So,, 00 0

10 000
Goodwill 30
, 000 20
, 000 ,

c)& ,00040
, 000 60
80 , 000

↑ Partnership will when he leaves

pay C40 , 000

After is then taken out not included

adding Goodwill
,
again as it is in Capital normally
Dr Capital all 60
, 000

Cr Goodwill 60, 000

-
Capital
A B A B
b/d 80
, 000
60, 000
Goodwill 40
, 000 20
, ooo

40
, 00040
, 000
Cld

C goodwill of ,
000
originally
10
: has

now this
goodwill has been "bought" by A
using As capital
so -10, 000 has been reduced from As capital as it has been

converted into goodwill