# Practical Problem 04

Working:

 1) Calculation of Share of Goodwill Goodwill = Average Profit x No of year of Purchase = (40,000 + 60,000 + 70,000 + 30,000)/4  x 2 = 2,00,000/4   x  2 = 50,000  x  2 = 1,00,000 2) Ramesh Share of Goodwill = Firm Goodwill  x Ramesh Share = 3,60,000  x  3/6 = Rs 50,000 Calculation of Share of Profit Due to Ramesh 3) Share of Profit Due to Ramesh = Last Year Profit  x Share of Profit  x Period = 50,000  x 3/6  x 5/12 = 10,417 (Profit & Loss Suspense A/c)

Solution:

 In the books of the partnership Firm Dr                                                                                                                                Virendar’s Capital A/c                                                                                                    Cr Particulars Amount Particulars Amount To Drawings A/c (3,000 x 5 Months) 15,000 By Balance b/d 90,000 By Goodwill A/c 50,000 By Profit & Loss Suspense A/c 10,417 By Reserve Fund A/c 15,000 1,65,417 1,65,417