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R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2006. It was decided to value the goodwill on the basis of three year’s purchase of last five years average profits. If the profits are Rs. 29,600; Rs. 28,700; Rs. 28,900; Rs. 24,000 and Rs. 26,800. What will be D’s share of goodwill?
  • a)
    Rs. 20,700.
  • b)
    Rs. 27,600.
  • c)
    Rs. 82,800.
  • d)
    Rs. 27,000.
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
R, J and D are the partners sharing profits in the ratio 7:5:4. D died...

To calculate D's share of goodwill, we need to follow these steps:
1. Calculate the average profit for the last five years:
- Add up the profits: 29,600 + 28,700 + 28,900 + 24,000 + 26,800 = 138,000
- Divide the total by 5: 138,000 / 5 = 27,600
2. Calculate the value of goodwill based on three year's purchase of the average profit:
- Multiply the average profit by 3: 27,600 * 3 = 82,800
3. Calculate D's share of the goodwill based on the profit-sharing ratio:
- The total ratio of profits is 7 + 5 + 4 = 16
- D's share of the goodwill will be (4/16) * 82,800 = 20,700
Therefore, D's share of the goodwill is Rs. 20,700. (Option A)
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R, J and D are the partners sharing profits in the ratio 7:5:4. D died...
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R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2006. It was decided to value the goodwill on the basis of three year’s purchase of last five years average profits. If the profits are Rs. 29,600; Rs. 28,700; Rs. 28,900; Rs. 24,000 and Rs. 26,800. What will be D’s share of goodwill?a)Rs. 20,700.b)Rs. 27,600.c)Rs. 82,800.d)Rs. 27,000.Correct answer is option 'A'. Can you explain this answer?
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