[ISC] Q. 7 Death of Partner Solution TS Grewal Class 12 (2023-24)

Solution to Question number 7 of the Death of Partner Chapter of TS Grewal Book ISC Board 2023-24 Edition?

Pawan, Raman and Sharman were partners sharing profits in the ratio of 4/8, 3/8 and 1/8. It is provided in the partnership Deed that on the death of any partner, partner’s share of the goodwill is to be valued at one-half of the net profit credited to his account during the last four completed financial years.

Raman died on 1st April, 2022. Firm’s profits and losses for the last 4 financial years were: 2018 – 19 (Profit ₹ 1,20,000); 2019 – 20 (Profit ₹ 60,000); 2020 – 21 (Loss ₹ 20,000) and 2021 – 22 (Profit ₹ 80,000).

(i) Determine the amount that should be credited to Raman for his share of goodwill.

(ii) Pass a Journal entry for the adjustment of Goodwill when profit-sharing ratio between Pawan and Sharman in future will be 3 : 2. Show your workings clearly.

Solution:-