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. (Delhi and A1 2018)


Meetu’s Share of Goodwill = Rs. 4,20,000 x 1 / 3 = Rs. 1,40,000
Meetu’s Share of Goodwill Rs. 1,40,000 would be adjusted between Neetu and Teetu in their gaining ratio of 1: 1.


DateParticularsL.FAmount (Dr.)Amount (Cr.)
2018 Jan 1Neetu’s Capital A/c (1,40,000 x 1 / 2) Dr.
Teetu’s Capital A/c (1,40,000 x 1 / 2) Dr.
   To Meetu’s Capital A/c
(Meetu’s share of Goodwill created in her capital account by debiting Neetu’s and Teetu’s capital account in their gaining ratio i.e.,1: 1)
 70,000 70,000    1,40,000

Note: Since the profit-sharing ratio is not given, it is assumed that they are sharing profits equally.

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