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Question 08 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Q-8 - CH-3 - Usha +2 Book 2018 - Solution

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Question 08 Chapter 3 of +2-Part-1

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8. (Weighted Average Profit Method) The profits of Ram Mills for the last five years were as under:

Year Profit/Loss
201510,000
201620,000
201730,000
201840,000
201960,000

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)

201510,000110,000
201620,000240,000
 201730,000390,000
201840,00041,60,000
 201960,00053,00,000
    
Total156,00,000

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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

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

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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