Rohan, Bharti and Leela are partners. On the retirement of Rohan, the goodwill already appears in the balance sheet at ₹24,000. The goodwill will be written-off:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- By debiting all partners' capital accounts in their old profit-sharing ratio.
The goodwill will be written-off by debiting all partners' capital accounts in their old profit-sharing ratio.
The existing goodwill is the written off by debiting the partner's capital account in the old ratio of the partners and crediting goodwill. The following journal entry is passed for this-
Partner's Capital A/c Dr.
To goodwill A/c
So, in this case entry will be-
Rohan Capital A/c Dr. 8,000
Bharti Capital A/c Dr. 8,000
Leela Capital A/c Dr. 8,000
To Goodwill A/c 24,000