Partnership Deed of C and D, who are equal partners, has a clause that any partner may retire from the firm on the following terms by giving a six month notice in writing:
- The amount standing to the credit of his Capital Account and Current Account.
- His share of profit to the date of retirement, calculated on the basis of the average profit of the three preceding completed years.
- Half the amount of the goodwill of the firm calculated at 1 and half times the average profit of the three preceding completed years.
C gave a notice on 31st March, 2022 to retire on 30th september, 2022, when the balance of his Capital Account was ₹ 6,000 and his Current Account (Dr.) ₹ 500. Profits for the three preceding completed years ended 31st March, were: 2020 – ₹ 2,800; 2021 – ₹ 2,201 and 2022 – ₹ 1,600.
Determine the amount due to C as per the partnership agreement.
Solution :
