Mita, Gita and Sita are partners in a firm sharing profits in the ratio of 1:2:3. Gita retired and the value of the goodwill of the firm is valued at Rs. 60,000. Mita and Sita continue the business sharing profits in the ratio of 1:3. What will be the journal entry for adjustment of goodwill ? Option 1: Mita's Capital A/c Dr. 5,000 Sita's Capital A/c Dr. 15,000 To Gita's Capital A/c 20,000 Option 2: Sita's Capital A/c Dr. 5,000 Mita's Capital A/c Dr. 15,000 To Gita's Capital A/c 20,000 Option 3: Gita's Capital A/c Dr. 20,000 To Mita's Capital A/c 5,000 To Sita's Capital A/c 15,000 Option 4: Gita's Capital A/c Dr. 20,000 To Bank A/c 20,000

Answer: Mita's Capital A/c Dr. 5,000 Sita's Capital A/c Dr. 15,000 To Gita's Capital A/c 20,000. Solution: Gita's share of goodwill = 60,000 x 2/6 = 20,000. Gain of Mita = 1/4 - 1/6 = 1/12; gain of Sita = 3/4 - 3/6 = 3/12. Gaining ratio =1:3. Mita bears 20,000 x 1/4 = 5,000 and Sita 15,000, both debited, with Gita's capital credited.

Partnership

Retirement/Death

Hard

common

Mita, Gita and Sita are partners in a firm sharing profits in the ratio of 1:2:3. Gita retired and the value of the goodwill of the firm is valued at Rs. 60,000. Mita and Sita continue the business sharing profits in the ratio of 1:3. What will be the journal entry for adjustment of goodwill ?

Mita's Capital A/c Dr. 5,000

Sita's Capital A/c Dr. 15,000

To Gita's Capital A/c 20,000

Sita's Capital A/c Dr. 5,000

Mita's Capital A/c Dr. 15,000

To Gita's Capital A/c 20,000

Gita's Capital A/c Dr. 20,000

To Mita's Capital A/c 5,000

To Sita's Capital A/c 15,000

Gita's Capital A/c Dr. 20,000

To Bank A/c 20,000

✅ Correct Option: 1

Gita's share of goodwill $= 60{,}000 \times 2/6 = 20{,}000$ .

Gain of Mita $= 1/4 - 1/6 = 1/12$ ; gain of Sita $= 3/4 - 3/6 = 3/12$ . Gaining ratio $=1:3$ .

Mita bears $20{,}000 \times 1/4 = 5{,}000$ and Sita $15{,}000$ , both debited, with Gita's capital credited.

2026: 19 May Shift 1

Manav, Nath and Narayan were partners in a firm sharing profits in the ratio of 1 : 2 : 1. The firm closes its books on 31st March every year. On 30th September, 2025 Nath died.

Match List-I with List-II

List-I	List-II
(A) There was a debit balance of Rs 30,000 in the profit and loss account.	(I) Nath's Capital A/c will be debited by Rs. 5100
(B) Nath's share of profit/loss in the year of his death was to be calculated on the basis of average profit/loss of last 5 years, the average loss is Rs 90,000.	(II) Nath's Capital A/c will be debited by Rs. 15000
(C) There was a Goodwill appearing in the books for Rs. 25000.	(III) Nath's Capital A/c will be debited by Rs. 12500
(D) There was a drawing of Nath of Rs 85000 on which interest is to be charged at 12%.	(IV) Nath's Capital A/c will be debited by Rs. 22,500

Choose the correct answer from the options given below:

2025: 15 May Shift 2

Gaining ratio among remaining partners Preeti and Shershah is

2025: 15 May Shift 2

L, N and T are partners sharing profits in the ratio of 5:3:2. If N retires, the gaining ratio of L & T would be.......

2023: 29 May Shift 2

From the following identify the items which are payable to retiring partner, if mentioned in deed:

A. Credit balance of his/her Capital/Current Account

B. Share of goodwill

C. Goodwill of the firm

D. Share in revaluation gain/loss

E. Share in accumulated profits (Reserves)

Choose the correct answer from the options given below:

2025: 22 May Shift 2

The major difference between Retirement and Death is

2026: 11 May Shift 2

Match the LIST-I with LIST-II

LIST-I		LIST-II
A. Preparation of Profit & Loss Suspense A/c	I.	Admission of a partner
B. When firm requires additional capital or managerial help or both for the expansion of its business	II.	Change in the existing agreement
C. This happens on account of a change in the existing partners' role in the firm.	III.	Retirement of an existing partner
D. It means withdrawal by a partner from the business of the firm which may be due to his bad health, old age or change in business interests.	IV.	Death of a partner

Choose the correct answer from the options given below:

Mita, Gita and Sita are partners in a firm sharing profits in the ratio of 1:2:3. Gita retired and the value of the goodwill of the firm is valued at Rs. 60,000. Mita and Sita continue the business sharing profits in the ratio of 1:3. What will be the journal entry for adjustment of goodwill ?

Solution

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