X, Y, and Z were partners in a firm sharing profits in the ratio of 3:2:1. Z retired and the new profit sharing ratio was 1:2. The firm’s Goodwill was valued at ₹60,000. How much Y will pay and to whom?

₹10,000 to X and  ₹10,000 to Z

The correct answer is option 3- ₹10,000 to X and  ₹10,000 to Z.

Old ratio = 3:2:1 (X, Y & Z)
Z retires
New ratio = 1:2 (X & Y)

Gained share = New share - Old share

X gains = 1/3 - 3/6
            = (2-3)/6
            = -1/6. As this is negative so it is sacrifice

Y gains =  2/3 - 2/6
            = (4-2)/6
            = 2/6

Goodwill = 60,000
Z's share of Goodwill = 60,000*1/6
                                  = 10,000

As Y gains so he will compensate Retiring partner and sacrificing partner.

X share in goodwill = 60,000 x 1/6
                               = 10,000

Y will pay = 60,000*2/6
               = 20,000
Y will pay total 20,000 to both the partners. Equal amount of 10,000 to each.

Journal entry for this-

Y's Capital A/c Dr. 20,000
    To X's Capital A/c   10,000
    To Z's Capital A/c   10,000