A, B and C are sharing profits in the ratio of 3 : 2 : 1. B retires and on the day of B's retirement, Goodwill is valued at ₹60,000. A and C decided to share future profits in the ratio of 3 : 2. Journal entry will be :

A's Capital A/c Dr.    ₹6,000
C's Capital A/c Dr.    ₹14,000
   To B's Capital A/c        ₹20,000

The correct answer is option 2-
A's Capital A/c Dr.    ₹6,000
C's Capital A/c Dr.    ₹14,000
     To B's Capital A/c        ₹20,000

Old ratio = 3:2:1
New ratio after B's retirement = 3:2

Gained share = New share -Old share
Gain of A = 3/5-3/6
               = (18-15)/30
               = 3/30
Gain of C = 2/5-1/6
               = (12-5)/30
               = 7/30
Gaining ratio = 3/30 : 7/30 i.e. 3:7

Goodwill of firm = 60,000
B' share in goodwill = 60,000 x 2/6
                               = ₹20,000
This 20,000 is borne by gaining partners in their gaining ratio. There accounts are debited and retiring partner is credited.

A's debited by = 20,000 x 3/10
                       = 6,000
C's debited by = 20,000 x 7/10
                       = 14,000            

Journal entry will be-
A's Capital A/c Dr    ₹6,000
C's Capital A/c Dr    ₹14,000
    To B's Capital A/c         ₹20,000