Akash, Bhupesh, and Charan are partners in a firm sharing profits in the ratio of 3:2:1. Bhupesh retired and goodwill of the firm was valued at Rs. 60,000. Akash and Charan continue the business, sharing profits in the ratio of 3:1. What will be the journal entry for adjustment of goodwill in this case?

Akash's Capital A/c Dr. 15,000
Charan's Capital A/c Dr. 5,000
To Bhupesh's Capital A/c 20,000

Correct answer: Option (1) → Akash's Capital A/c Dr. 15,000; Charan's Capital A/c Dr. 5,000; To Bhupesh's Capital A/c 20,000

Concept: Adjustment of goodwill on retirement – gaining partners compensate the retiring partner in their gaining ratio, per Reconstitution of a Partnership Firm – Retirement/Death of a Partner.

Bhupesh’s share of goodwill = 60,000 × 2/6 = Rs. 20,000.
Gaining ratio: Akash = 3/4 – 3/6 = 9/12 – 6/12 = 3/12; Charan = 1/4 – 1/6 = 3/12 – 2/12 = 1/12 ⇒ 3 : 1.
So Akash and Charan bear the 20,000 in 3 : 1 = Rs. 15,000 and Rs. 5,000 respectively.
Entry: Akash’s Capital A/c Dr. 15,000; Charan’s Capital A/c Dr. 5,000; To Bhupesh’s Capital A/c 20,000.