X; Y and Z are partners sharing profits in the ratio of 2 : 3 : 5. Goodwill is already appearing in their books at a value of ₹ 60,000. X retires and Y and Z decided to share future profits equally. Journal entry will be:

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X’s Capital A/c ...Dr. 12,000 Y’s Capital A/c ...Dr. 18,000 Z’s Capital A/c ...Dr. 30,000 To Goodwill A/c 60,000 Explanation: Goodwill of the firm = 60,000 Partners sharing profits ratio = 2 : 3 : 5 X = 60,000xx2/10 = 12,000 Y = 60,000xx3/10 = 18,000 Z = 60,000xx5/10 = 30,000

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