30 :- Partnership deed of C and D, who are equal partners, has a clause that any partner may retire from the firm on the following terms by giving a six-month notice in writing
The retiring partner shall paid –
(a)The amount standing to the credit of his capital account and current account
(b)His share of profit to the date of retirement, calculated on the basis of the average profit of the firm preceding completed years
(c)Half the amount of the goodwill of the firm calculated at 1.5 times the average profit of the three preceding completed years
C gave a notice on 31st March 2024, to retire on 30th september 2024, when the balance of his capital account was Rs 6,000 and his current account (Dr) Rs 500. Profits for the three preceding completed years ended 31st March, were : 2022 – Rs 2,800; 2023 — Rs 2,200 and 2024 – Rs 1,600.
Determine the amount due to C as per the partnership agreement.
Solution :-
WORKING NOTES
(a) Calculation of Average profits of the last three preceding years
Average profits = 2,800 + 2,200 + 1,600/3
= 6,600/3
= Rs 2,200
C’s share in profits = 2,200 x 6/12 x 1/2 = Rs 550
(b) Calculation of Goodwill of the firm
Goodwill = 2,200 x 1.5
= Rs 3,300
C’s share in goodwill = Rs 1,650