Question

Neetu, Meetu and Teetu were partners in a firm. On 1^st 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

As the profit sharing ratio is not given, it is assumed to be equal, thus, Meetu’s Sharein profits is 1/3.

Goodwill of the firm = Rs. 4,20,000

Meetu’s share of goodwill `=4,20,000xx1/3=1,40,000`

Date	Particulars	L.F.	Debit Amount Rs	Credit Amount Rs
Jan 1,2018	Neetu’s Capital A/c      Dr		70,000
	Teetu’s Capital A/c     Dr		70,000
	To Meetu’s Capital A/c			1,40,000
	(Being goodwill adjusted in the ratio 1:1)