Question

1. "A', 'B' and 'C' are in partnership sharing profits in the ratio of 4:3:1. It is provided under the
partnership deed that on the death of a partner his share of goodwill to be calculated at twice the
average of the last three years' profits. 'A' dies in the current year.
The profits of the last three years were as follows: Rs. 40000, Rs.50000 and Rs. 60000.
Determine the amount of Goodwill to be credited to A's capital account and give the Journal entry in
the books of firm to carry out the transaction assuming that profit sharing ratio between 'B' and 'C'
in future will be 3:2.
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Answer 1

Answer:

average profit =10000+9000+11000+7000+8000/5

=45000/5=9000

goodwill =9000*3=27000

Y's share of goodwill=27000*2/6=9000