Kavi, Ravi, Kumar and Guru were partners in a firm sharing profits in the ratio of 3:2:2:1. On 1/2/2017, Guru retired and the new profit sharing ratio decided between Kavi, Ravi and Kumar was 3:1:1. On Guru's retirement, the goodwill of the firm was valued at Rs.3,60,000. Showing your working notes clearly, pass necessary journal entry in the books of the firm for the treatment of goodwill on Guru's retirement.

Journal

Date Particular L.F. Debit Amount(Rs) Credit Amount(Rs)

Kavi's Capital A/c Dr. 81,000
To Ravi's Capital A/c 18,000
To Kumar's Capital A/c 18,000
To Guru's Capital A/c 45,000
(Goodwill adjusted through capitals)

Working Notes:
Gaining Ratio = New Ratio - Old Ratio
Kavi=3/5 - 3/8 = 9/40
Ravi=1/5 - 2/8 = -1/40 (sacrifice)
Kumar=1/5 - 2/8 = -1/40 (sacrifice)

Kavi's share of goodwill=3,60,000 × 9/40 = Rs.81,000
Ravi's share of goodwill=3,60,000 × 1/40 = Rs.9,000
Kumar's share of goodwill=3,60,000 × 1/40 = Rs.9,000
Guru's share of goodwill=3,60,000 × 1/8 = Rs.45,000