Mita, Gita and Sita are partners in a firm sharing profits in the ratio of 1:2:3. Gita retired and the value of the goodwill of the firm is valued at Rs. 60,000. Mita and Sita continue the business sharing profits in the ratio of 1:3. What will be the journal entry for adjustment of goodwill ?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Mita's Capital A/c Dr. 5,000 and Sita's Capital A/c Dr. 15,000, To Gita's Capital A/c 20,000
On retirement, the retiring partner is paid for her share of goodwill by the partners who take over her share, in their gaining ratio (new share − old share).
Gita's share of goodwill = 60,000 × 2/6 = Rs. 20,000
Mita's gain = 1/4 − 1/6 = 3/12 − 2/12 = 1/12
Sita's gain = 3/4 − 3/6 = 9/12 − 6/12 = 3/12
Gaining ratio = 1 : 3
Mita pays 20,000 × 1/4 = Rs. 5,000
Sita pays 20,000 × 3/4 = Rs. 15,000
The entry:
Mita's Capital A/c Dr. 5,000
Sita's Capital A/c Dr. 15,000
To Gita's Capital A/c 20,000
The gaining partners' capitals are debited because they give up value; Gita's capital is credited because she receives it.
Note: NTA picked this question from an NCERT (2026-27) illustration and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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