Rohan, Mohan and Sohan were partners in a firm sharing profits in the ratio of 5:3:2. Mohan retired and on his retirement goodwill of the firm was valued at ₹1,20,000. Rohan and Sohan decided to share future profits in the ratio 2:3. Record Journal entry for the treatment of Goodwill.

Sohan's Capital A/c Dr 48,000
     To Rohan's Capital A/c 12,000
     To Mohan's Capital A/c 36,000

The correct answer is option (2) :

Sohan's Capital A/c Dr. 48,000
     To Rohan's Capital A/c 12,000
     To Mohan's Capital A/c 36,000.

Old ratio = 5:3:2 (Rohan, Mohan and Sohan)
New ratio = 2:3 (Rohan and Sohan)

Gain = New share - Old share

Gain of Rohan = 2/5 - 5/10
                     = (4-5)/10
                     = -1/10
As this is in negative means it is sacrifice. Share in goodwill = 1,20,000 x 1/10
                                                                                       = ₹12,000

Gain of Sohan = 3/5 - 2/10
                     = (6-2)/10
                     = 4/10
Share in goodwill = 1,20,000 x 4/10
                         = ₹48,000

Share of Mohan = 3/10
Share in goodwill = 1,20,000 x 3/10
                         = ₹36,000

So gaining partner will compensate the sacrificing partner and retiring partner for their share of goodwill. Gaining partner is debited and others are debited for the goodwill share. So journal entry will be-
Sohan's Capital A/c Dr 48,000
     To Rohan's Capital A/c 12,000
     To Mohan's Capital A/c 36,000