question_answer

R Q and R were partners in a firm sharing profits and losses equally. The goodwill of the firm was valued at two years' purchase of the average profits of last five years. The profits of the last five years were as follows:

Year	Profit (Rs.)
I	2,00,000
II	2,40,000
III	3,66,500
IV (Loss)	16,500
V	1,10,000

Goodwill is already appearing in the books at Rs. 90,000. From 1st April, they decided to share profits in the ratio of 1 : 2 : 1 : You are required to (i) Calculate the goodwill of the firm.                     (ii) Pass necessary journal entry.

Answer:

Amount of goodwill = Rs. 3,60,000