Question 07 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 07 Chapter 3 of +2- Part-

Question 07 Chapter 3 of +2-Part-1

7. (Profit & Loss on fixed asset are given) In a firm of partners X and Y, the following was the financial position:
2014: Profits Rs.30,000 (including profit on sale of land Rs.40,000)
2015: Loss Rs.25,000 (After crediting claim for loss of asset Rs.35,000)
2016: Profit Rs.50,000 (Before paying manager’s commission Rs.10,000)
2017: Profit Rs.40,000 (including loss on sale of plant Rs.10,000)
Goodwill is to be valued two times of average normal profit of last four years. Find out goodwill.

 

The solution of Question 07 Chapter 3 of +2 Part-1: – 

 

Average Profit = Total Profit for past given years
    Number of years
     
  = (-10,000) + (-60,000) + 40,000 + 50,000
  4
     
  = 20,000
  4
     
  = 5,000

 

Number of years’ purchase = 2
Goodwill = Average Profit X Number of years’ purchase
Goodwill = 5,000 X 2
Goodwill = 10,000

 

 

Working Note : –

*1 Calculation of Profits of last three years

Adjusted Profit for 1st year = Total Profit −Interest on capital
  = 30,000 – 40,000
 
  = (-10,000)

 

Adjusted Profit for 2nd year = Total Profit – Claim for loss of asset
  = -(25,000) – 35,000
 
  = (-60,000)

 

Adjusted Profit for 3rd year = Total Profit − Interest on capital
  = 50,000 – 10,000
 
  = 40,000

 

Adjusted Profit for 3rd year = Total Profit − Interest on capital
  = 40,000 + 10,000
 
  = 50,000





Thanks, Please Like and share with your friends  

Comment if you have any questions.

Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

  • Chapter No. 1 – Accounting Not for Profit Organisations
  • Chapter No. 2 – Partnership Accounts – I
  • Chapter No. 3 – Partnership Accounts – II (Introduction)
  • Chapter No. 4 – Partnership Accounts – III (Goodwill: Nature and Valuation)
  • Chapter No. 5 – Partnership Accounts – IV (Reconstitution of Partnership)
  • Chapter No. 6 – Partnership Accounts – V (Admission of A Partner)
  • Chapter No. 7 – Partnership Accounts – VI (Retirement and Death of A Partner)
  • Chapter No. 8 – Company Accounts (Share Capital)
  • Chapter No. 9 – Company Accounts (Issue of Debentures)
  • Chapter No. 10 – Company Accounts (Redemption of Debentures)

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

  • Chapter No. 1 – Financial Statements of a Company (Balance Sheet Only)
  • Chapter No. 2 – Techniques of Financial Statement Analysis
  • Chapter No. 3 – Ratio Analysis 
  • Chapter No. 4 – Cash Flow Statement

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 07 Chapter 3 of +2 Part-1 - USHA Publication  12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.