Question 08 Chapter 3 of +2-Part-1
Table of Contents
8. (Weighted Average Profit Method) The profits of Ram Mills for the last five years were as under:
| Year | Profit/Loss |
| 2015 | 10,000 |
| 2016 | 20,000 |
| 2017 | 30,000 |
| 2018 | 40,000 |
| 2019 | 60,000 |
Calculate the value of goodwill is 2 years purchase of average weighted profits. The weights are 1,2,3,4 and 5 in the year of 2015, 2016, 2017, 2018 and 2019.
The solution of Question 08 Chapter 3 of +2 Part-1: –
| Calculation of Weighted Average Profit |
|||
| Year |
Adjusted Profit (A) | Weight (D) |
Product (E = C * D) |
| 2015 | 10,000 | 1 | 10,000 |
| 2016 | 20,000 | 2 | 40,000 |
| 2017 | 30,000 | 3 | 90,000 |
| 2018 | 40,000 | 4 | 1,60,000 |
| 2019 | 60,000 | 5 | 3,00,000 |
| Total | 15 | 6,00,000 | |
| Weighted Average Profit | = | Total weighted Profit |
| Total weight | ||
| = | 6,00,000 | |
| 15 | ||
| = | 40,000 |
| Number of years’ purchase | = | 2 |
| Goodwill | = | Weighted Average Profit X Number of years’ purchase |
| Goodwill | = | 40,000 X 2 |
| Goodwill | = | 80,000 |
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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 (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- 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
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
