P, R and S are in partnership sharing | Death of a partner Solution | 2022-23 | 2021-22| 2019-20

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P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in the Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profit credited to his account during the last four completed years.
R died on 1st January, 2021. The firm’s profits for the last four years ended 31st December, were as:
2017 − Rs. 1,20,000; 2018 − Rs. 80,000; 2019 − Rs. 40,000; 2020 − Rs. 80,000.
(a) Determine the amount that should be credited to R in respect of his share of Goodwill.
(b) Pass Journal entry without raising Goodwill Account for its adjustment.

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