Negi, Bhagi, Tiwari and Chaman are partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2 : 1. On Negi's retirement, the goodwill of the firm is valued at Rs. 36,000. Bhagi, Tiwari and Chaman decided to share future profits equally. What will be the journal entry for the treatment of goodwill without opening ‘Goodwill Account’ in this case?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Bhagi’s Capital A/c Dr. 6,000 and Chaman’s Capital A/c Dr. 6,000, To Negi’s Capital A/c 12,000
On retirement, the retiring partner gets his share of goodwill from the partners who gain his share. Without opening a Goodwill Account, the gaining partners’ capital accounts are debited in their gaining ratio and the retiring partner’s capital account is credited.
Negi’s share of goodwill:
Old ratio 2 : 1 : 2 : 1, so Negi’s share = 2/6
Negi’s share of goodwill = Rs. 36,000 × 2/6 = Rs. 12,000
Gain of each remaining partner (new share 1/3 = 2/6 each):
Bhagi = 2/6 − 1/6 = 1/6
Tiwari = 2/6 − 2/6 = nil
Chaman = 2/6 − 1/6 = 1/6
Gaining ratio of Bhagi and Chaman = 1 : 1, so each is debited Rs. 12,000 × 1/2 = Rs. 6,000. Tiwari gains nothing, so he is not debited at all, even though he stays in the firm.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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