Question

Neetu, Meetu, and Teetu were partners in a firm. On 1st January 2018, Meetu retired. On Meetu's retirement, the goodwill of the firm was valued at Rs 4,20,000.

Pass necessary journal entry for the treatment of goodwill on Meetu's retirement.

Answer 1

Meetu’s Share in Profits: 1/3 (as the profit sharing ratio is not given, it is assumed to be equal).

Goodwill of the firm = Rs 4,20,000

Meetu's share of Goodwill = `420000 xx 1/3 = Rs 140000`

Journal
Date	Particulars	L.F.	Dr. Rs	Cr. Rs
2018 Jan 1	Neetu's Capital A/c       Dr. Teetu's Capital A/c       Dr.            To Meetu's Capital A/c (Being goodwill adjusted in 1:1)		70,000 70,000	1,40,000