Puneet, Purav and Parth were partners in a firm sharing profits and losses in the ratio of 4:3:1. The firm closes its books on 31st March every year. As per the terms of partnership deed, on the death of any partner, the Goodwill of the firm will be calculated on the basis of 3 times the average profits of last 4 years. Puneet died on 1st July, 2021. The profits for last four years were:
Puneet’s share of profit up to the date of death was to be calculated on the basis of previous year’s profit.
(i) Calculate goodwill of the firm and Puneet’s share of goodwill.
(ii) Calculate Puneet’s share in the profits of the firm till the date of his death.
(iii) Pass necessary journal entries for the treatment of goodwill without opening goodwill account and for Puneet’s share of profit at the time of his death.