Jay, Kirti, Ekta and Shamira are partners in a firm sharing profits and losses in the ratio of 2:1:2:1. On Jay's retirement, the goodwill of the firm is valued at Rs. 36,000. Kirti, Ekta and Shamira decided to share future profits equally. Which of the following is correct journal entry for the treatment of goodwill in this case?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Kirti's and Shamira's Capital Accounts debited with Rs. 6,000 each, Jay's Capital Account credited with Rs. 12,000
On retirement, the retiring partner gets his share of goodwill, and it is paid for by the partners who gain, in their gaining ratio. Gain = new share − old share.
Jay's share of goodwill = Rs. 36,000 × 2/6 = Rs. 12,000
New share of each remaining partner = 1/3 = 2/6
Kirti's gain = 2/6 − 1/6 = 1/6
Ekta's gain = 2/6 − 2/6 = 0 (neither gain nor sacrifice)
Shamira's gain = 2/6 − 1/6 = 1/6
Gaining ratio of Kirti and Shamira = 1 : 1
Kirti pays Rs. 12,000 × 1/2 = Rs. 6,000; Shamira pays Rs. 6,000
The entry is:
Kirti's Capital A/c Dr. 6,000
Shamira's Capital A/c Dr. 6,000
To Jay's Capital A/c 12,000
Ekta's share stays at 2/6, so Ekta pays nothing. An entry that debits Ekta leaves out Shamira, who has gained.
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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