X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Z retired and the new profit sharing ratio between X and Y was 1 : 2. On Z’s retirement the goodwill of the firm was valued at ₹ 30,000

X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Z retired and the new profit sharing ratio between X and Y was 1 : 2. On Z’s retirement the goodwill of the firm was valued at ₹ 30,000. Pass necessary journal entry for the treatment of goodwill on Z’s retirement.

[Ans. Only Y gains 2/6, X has also sacrificed 1/6. Hence Y will be debited from ₹ 10,000 and X and Z will be credited from ₹ 5,000 each.]