If the partners decide to withdraw the amount of premium for goodwill…

The correct answer is Option (3) → Old Partners’ Capital A/c Dr., to Bank/Cash A/c (the goodwill withdrawn by the old partners in their sacrificing ratio)

The premium for goodwill brought in by the new partner is credited to the old partners in their sacrificing ratio, since it compensates them for the share they give up. If they decide to take the amount out, each withdraws what was credited to him, so the withdrawal also follows the sacrificing ratio:

Old Partners’ Capital A/c   Dr.
    To Bank/Cash A/c
(The amount of goodwill withdrawn by the old partners in their sacrificing ratio)

Why the other options are incorrect

• Option (1) All Partners’ Capital A/c Dr. To Bank/Cash A/c, in the new ratio — Incorrect. The new partner cannot withdraw any part of the premium he brought in; it was paid to the old partners.

• Option (2) Old Partners’ Capital A/c Dr. To Bank/Cash A/c, in their new profit sharing ratio — Incorrect. The new ratio decides future profits. The amount credited, and so the amount withdrawn, follows the sacrifice, not the new ratio.

• Option (4) No entry will be passed — Incorrect. No additional entry is needed only when the premium is retained in the business. Once it is withdrawn, cash leaves the firm and the entry above is passed.