Gobind, Hari and Pratap are partners. On retirement of Gobind, the goodwill already appears in the Balance Sheet at Rs. 24,000. The goodwill will be written-off - Option 1: by debiting all partners' capital accounts in their old profit sharing ratio. Option 2: by debiting remaining partners' capital accounts in their new profit sharing ratio. Option 3: by debiting retiring partners' capital accounts from his share of goodwill Option 4: by debiting retiring partners' capital accounts in gaining ratio

Answer: by debiting all partners' capital accounts in their old profit sharing ratio. Solution: When goodwill already appears in the Balance Sheet and a partner retires, the existing goodwill must be written off by debiting all partners' capital accounts in their old profit sharing ratio. This is because the existing goodwill was an asset belonging to all three partners (Gobind, Hari and Pratap) in their old profit sharing ratio. Since this asset is being removed from the books, all partners including the retiring partner must bear the loss proportionately based on how they shared profits earlier. Journal Entry for writing off existing goodwill:, Particulars, Debit (Rs.), Credit (Rs.), Gobind's Capital A/c, (his old share), Hari's Capital A/c, (his old share), Pratap's Capital A/c, (his old share), To Goodwill A/c, 24,000, (Existing goodwill written off), The retiring partner's share of goodwill at the time of retirement (if any new goodwill is calculated) is a separate matter and is handled differently. That would be compensated by the continuing partners based on their gain. However, the write-off of existing goodwill always involves all partners in their old ratio. The remaining partners cannot write it off in their new ratio (Option 2) because the retiring partner also owned a share in this existing goodwill. Options 3 and 4 are incorrect as they suggest only the retiring partner's capital should be debited, which is not the case for writing off existing goodwill.

Partnership

Retirement/Death

Medium

common

Gobind, Hari and Pratap are partners. On retirement of Gobind, the goodwill already appears in the Balance Sheet at Rs. 24,000. The goodwill will be written-off -

by debiting all partners' capital accounts in their old profit sharing ratio.

by debiting remaining partners' capital accounts in their new profit sharing ratio.

by debiting retiring partners' capital accounts from his share of goodwill

by debiting retiring partners' capital accounts in gaining ratio

✅ Correct Option: 1

When goodwill already appears in the Balance Sheet and a partner retires, the existing goodwill must be written off by debiting all partners' capital accounts in their old profit sharing ratio.

This is because the existing goodwill was an asset belonging to all three partners (Gobind, Hari and Pratap) in their old profit sharing ratio. Since this asset is being removed from the books, all partners including the retiring partner must bear the loss proportionately based on how they shared profits earlier.

Journal Entry for writing off existing goodwill:

Particulars	Debit (Rs.)	Credit (Rs.)
Gobind's Capital A/c	(his old share)
Hari's Capital A/c	(his old share)
Pratap's Capital A/c	(his old share)
To Goodwill A/c		24,000
(Existing goodwill written off)

The retiring partner's share of goodwill at the time of retirement (if any new goodwill is calculated) is a separate matter and is handled differently. That would be compensated by the continuing partners based on their gain. However, the write-off of existing goodwill always involves all partners in their old ratio.

The remaining partners cannot write it off in their new ratio (Option 2) because the retiring partner also owned a share in this existing goodwill. Options 3 and 4 are incorrect as they suggest only the retiring partner's capital should be debited, which is not the case for writing off existing goodwill.

2026: 29 May Shift 2

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2026: 11 May Shift 2

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2026: 23 May Shift 2

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2025: 29 May Shift 2

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Gobind, Hari and Pratap are partners. On retirement of Gobind, the goodwill already appears in the Balance Sheet at Rs. 24,000. The goodwill will be written-off -

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