A, B and C were partners sharing profits and losses in the ratio of 7 : 3 : 2. From 1st April 2015, they decided to share profits and losses in the ratio of 8 : 4 : 3. Goodwill is to be valued at the average of three year's profits preceding the date of change in profit sharing ratio. The profits for the years ending 31st March 2012, 2013, 2014 and 2015 were Rs. 52,000, Rs. 48,000, Rs. 60,000 and Rs. 90,000 respectively. Give the necessary journal entry.

Explanation

Value of Goodwill Rs. 66,000, Debit B by Rs. 1,100 and C by Rs. 2,200, Credit by Rs. 3,300.