A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1. They decided to share future profits and losses in the ratio of 3 : 2 : 2 : 3. For this purpose goodwill of the firm valued at Rs. 1,50,000. There was also a reserve of Rs. 60,000 in the books of the firm.
Find out sacrifice ratio and gaining ratio and pass necessary journal entry assuming that reserve is not to be disttibuted.

Explanation

Debit C by Rs. 7,000 and D by Rs. 28,000, Credit A by Rs. 7,000 and B by Rs. 28,000.