Question

:
profits for the past four years have been 60,000; 350,000; 390,000 and 31,20,000
respectively. It is now agreed that in future Dinesh is to have 2/5th share in profits and
for that purpose goodwill is to be valued on the basis of 25 year's purchase of average
profits of the past four years. Give journal entry for the treatment of goodwill.
(Ans. Debit Dinesh by 330,000 and Credit Charu by $30,000.]​

Answer 1

Answer:

Debit Dinesh by Rs. 30,000 and Credit Charu by Rs. 30,000.