Practical Problem 04

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)

                                                                                       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