Ramesh, Mahesh and Suresh were partners in a firm sharing profits in the ratio of 3 : 3 : 2. Their respective fixed capitals were : Ramesh Rs.  5,00,000; Mahesh Rs.  4,00,000 and Suresh Rs.  3,00,000. They admitted Govind as a new partner for 1/5 th share in the profits. Govind brought Rs.  4,00,000 as his capital and the necessary amount for goodwill premium. Their new profit sharing ratio will be 2 : 1 : 1 : 1.

Calculate the value of goodwill of the firm, showing your workings clearly. Pass necessary journal entries for the above transactions on Govind’s admission.

Marks-6, CBSE:2018-19/Main/03/Q-15*