Dinesh and Mahesh are partners sharing profits and losses in the ratio of 3 : 2. They admit Ramesh into partnership for 1/4th share in profits. Ramesh brings in his share of goodwill in cash. Goodwill for this purpose shall be calculated at two years' purchase of the weighted average normal profit of past three years. Weights beling assigned to each year 2017 - 1, 2018 - 2, 2018 - 2 and 2019 - 3. Profits of the last three years were:
2017 - Profit Rs. 50,000 (including profits on sale of assets Rs. 5,000).
2018 - Loss Rs. 20,000 (including loss by fire Rs. 35,000).
2019 - Profit Rs. 70,000 (including insurance claim received Rs. 18,000 and interest on investments and dividend received Rs. 8,000).
Calculate the value of goodwill. Also, calculate the goodwill brought n by Ramesh.

Answer

Goodwill - Rs. 69,000; Ramesh shall bring 1/4rh of Rs. 69,000, i.e., Rs. 17,250 as Goodwill.