Working Note:
(1) C’s Share in Profits:
Last three year’s profit = 3,25,000 + 2,75,000 + 3,00,000
Average profit of last three years profits = 9,00,000 ÷ 3 = Rs 3,00,000
Profit of three months = 3,00,000 x \(\frac{3}{12}\) = Rs 75,000
C’s share in profit = 75,000 x \(\frac{1}{5}\) = Rs 15,000
(2) Calculation of goodwill as follows :
On the basis of average profit of last year’s profit, 2 times
Averge profit of last 5 years \(= \frac { 3,25,000 + 2,75,000 + 3,00,000+2,20,000 + 1,80,000 }{ 5 } \)
\(= \frac { 13,00,000 }{ 5 }\)
= Rs 2,60,000
Equal to 2 years purchase = 2,60,000 x 2 = Rs 5,20,000
C’s share of goodwill = 5,20,000 x \(\frac{1}{5}\) = Rs 10,4000
(3) Gain Ratio = Old Profit & Loss Ratio = 2:2:1
New Profit sharing ratio is not given.
C’s is retiring so gain ratio of A and B will 2 : 2 or 1 : 1 will be.
So, B and A will adjust the share of goodwill of C in equally.