X, Y and Z are partners sharing profits in the ratio of 4 : 2 : 3. Y retires. on this date his Capital after making adjustments for reserves and revaluation exists at ₹ 2,00,000

X, Y and Z are partners sharing profits in the ratio of 4 : 2 : 3. Y retires. on this date his Capital after making adjustments for reserves and revaluation exists at ₹ 2,00,000. X and Z agreed to pay him ₹ 2,40,000 in full settlement of his account. Record necessary journal entry for the treatment of goodwill if X and Z decided to share future profits equally.

[Ans. Hidden Goodwill ₹ 40,000. It will be debited to X and Z in their gaining ratio 1 : 3.]