P purchased business from Q on 30th June, 2019. Profit earned by Q for the preceding years ending on 31st December every year were:
2016- Rs 41,000, 2017 - Rs 40,000 and 2018 - Rs 42,000. It was ascertained that profits of 2017 included a non-recurring item of Rs 1,500 and profit of 2018 was reduced by Rs 2,000 due to an extraordinary loss on account of theft. The annual premium was Rs 200 per annum. P at the time of purchasing the business, was employed with Sufitel Associates and was getting Rs 500 p.m. He intends to replace the manager who at the present is getting Rs 350 p.m. The goodwill is calculated at 2 years purchase of the average profits. Calculate the goodwill of the business:
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