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 A, B and C are partners sharing profits and losses in the ratio of 3:2:1. C retires on a decided date and Goodwill of the firm is to be valued at Rs. 60,000. Find the mount payable to retiring partner on account of goodwill
  • a)
    Rs. 30,000
  • b)
    Rs. 20,000
  • c)
    Rs. 10,000
  • d)
    Rs. 60,000
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
A, B and C are partners sharing profits and losses in the ratio of 3:2...
Given:
- A, B, and C are partners sharing profits and losses in the ratio of 3:2:1.
- C retires on a decided date.
- Goodwill of the firm is to be valued at Rs. 60,000.

To find:
The amount payable to the retiring partner on account of goodwill.

Solution:

To calculate the amount payable to the retiring partner on account of goodwill, we need to find the value of goodwill based on the given ratio.

Step 1: Calculate the total profit of the firm.
Since the profit-sharing ratio is 3:2:1, the total ratio is 3+2+1 = 6.
Let's assume the total profit of the firm as 'P'.
So, A's share of profit = (3/6) * P
B's share of profit = (2/6) * P
C's share of profit = (1/6) * P

Step 2: Calculate the average profit of the firm.
The average profit of the firm is the total profit divided by the number of years.
Let's assume the number of years as 'n'.
So, the average profit of the firm = P/n

Step 3: Calculate the value of goodwill.
The value of goodwill can be calculated using the formula:
Goodwill = Average Profit * Number of Years

In this case, the goodwill is given as Rs. 60,000. So, we can write the equation as:
Rs. 60,000 = (P/n) * n
Rs. 60,000 = P

Step 4: Calculate the retiring partner's share of goodwill.
Since C retires, we need to find C's share of goodwill.
C's share of goodwill = (1/6) * Rs. 60,000
C's share of goodwill = Rs. 10,000

Therefore, the amount payable to the retiring partner on account of goodwill is Rs. 10,000.
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