On retirement of a partner, the retiring partner's capital account wi…

The correct answer is Option (1) → His/her share of goodwill

The retiring partner is compensated only for his/her own share of goodwill; this is credited to his capital account and debited to the gaining partners.

Option (2) Goodwill (valued) of the firm — Incorrect. The whole goodwill belongs to all partners; he gets only his share.

Option (3) Share of goodwill of remaining partners — Incorrect. The remaining partners’ shares stay with them.

Option (4) Existing goodwill of the firm — Incorrect. Goodwill already in the books is written off among all partners in the old ratio.