MOTI, CHOTI and GUDDU are partners in a firm sharing profits according to their capitals. Their capitals as on April 1, 2025 were Rs. 1,80,000; Rs. 1,40,000; and Rs. 1,40,000 respectively. MOTI retired on above date. Goodwill of the firm is valued at Rs. 92,000 and the retiring partner's share is adjusted through the capital accounts of remaining partners. Correct Journal entry for recording effect of goodwill in the books of the firm will be:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Choti’s capital A/c Dr. 18,000, Guddu’s capital A/c Dr. 18,000, To Moti’s capital A/c 36,000
Goodwill does not appear in the books, so the retiring partner is given his share of it by debiting the partners who gain, in their gaining ratio, and crediting his capital account.
Profits are shared according to capitals: 1,80,000 : 1,40,000 : 1,40,000 = 9 : 7 : 7
Moti’s share = 9/23
Moti’s share of goodwill = Rs. 92,000 × 9/23 = Rs. 36,000
Choti and Guddu take over Moti’s share in 7 : 7 = 1 : 1
Each is debited with Rs. 36,000 / 2 = Rs. 18,000
No Goodwill A/c is opened here, so the credit goes to Moti’s capital account, not to a Goodwill A/c.
Note: NTA picked this question from an NCERT (2026-27) illustration and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
|
