P, Q and R are partners sharing profits in the ratio of 4:3:3. They a…

The correct answer is Option (3) → Premium for Goodwill A/c Dr 24000
To P's capital A/c 9600
To Q's Capital A/c 7200
To R's Capital A/c 7200

The premium W brings is compensation to the old partners for the share of profit they give up, so it is credited to them in their sacrificing ratio. No ratio of sacrifice is stated, so W takes his 1/4 share from P, Q and R in their old ratio of 4:3:3, and the sacrificing ratio is also 4:3:3.

P’s share = Rs. 24,000 × 4/10 = Rs. 9,600
Q’s share = Rs. 24,000 × 3/10 = Rs. 7,200
R’s share = Rs. 24,000 × 3/10 = Rs. 7,200

The cash is first credited to Premium for Goodwill Account; that account is then debited and the sacrificing partners’ capital accounts are credited. As the goodwill is retained in the business, no further entry for withdrawal is passed. Crediting Rs. 8,000 to each partner would mean equal sacrifice, which the old ratio does not give, and raising a Goodwill Account in the books is not allowed under AS 26.