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\begin{array}{l}\phantom{40)}\phantom{1}\\40\overline{)120}\\\end{array}
Use the 1^{st} digit 1 from dividend 120
\begin{array}{l}\phantom{40)}0\phantom{2}\\40\overline{)120}\\\end{array}
Since 1 is less than 40, use the next digit 2 from dividend 120 and add 0 to the quotient
\begin{array}{l}\phantom{40)}0\phantom{3}\\40\overline{)120}\\\end{array}
Use the 2^{nd} digit 2 from dividend 120
\begin{array}{l}\phantom{40)}00\phantom{4}\\40\overline{)120}\\\end{array}
Since 12 is less than 40, use the next digit 0 from dividend 120 and add 0 to the quotient
\begin{array}{l}\phantom{40)}00\phantom{5}\\40\overline{)120}\\\end{array}
Use the 3^{rd} digit 0 from dividend 120
\begin{array}{l}\phantom{40)}003\phantom{6}\\40\overline{)120}\\\phantom{40)}\underline{\phantom{}120\phantom{}}\\\phantom{40)999}0\\\end{array}
Find closest multiple of 40 to 120. We see that 3 \times 40 = 120 is the nearest. Now subtract 120 from 120 to get reminder 0. Add 3 to quotient.
\text{Quotient: }3 \text{Reminder: }0
Since 0 is less than 40, stop the division. The reminder is 0. The topmost line 003 is the quotient. Remove all zeros at the start of the quotient to get the actual quotient 3.