# Question 09 Chapter 3 of +2 Part-1 – USHA Publication 12 Class Part – 1

Q-9 - CH-3 - Usha +2 Book 2018 - Solution

Question 09 Chapter 3 of +2-Part-1

9. (Weighted Average Profit Method) Calculate the value of goodwill of a firm on the basis of three years purchase of the weighted average profit of the last four years. The profits of last four years were:

 Year Profit/Loss 2014-15 5,000 2015-16 5,200 2016-17 9,300 2017-18 10,700

During 2014-15, there was abnormal loss of Rs.1,000 due to theft and in 2017-18 there was a profit from sale of land amounting to Rs.4,000. In 2015-16, closing stock was over valued by Rs.1,200. The weights are 1,2,3 and 4 for the year 2014-15,2015-16,2016-17 and 2017-18 respectively.

## The solution of Question 09 Chapter 3 of +2 Part-1: –

 Calculation of Adjusted Profit Particulars / Year Ended 2014-15 2015-16 2016-17 2017-18 Profit/(Loss) 5,000 5,200 9,300 10,700 Add: Abnormal Loss 1,000 Less: Profit on sale of land -4,000 Less: Overvaluation of Closing Stock – 1,200 Add: Overvaluation of Opening Stock 1,200 Total 6,000 4,000 10,500 6,700

 Calculation of Weighted Average Profit Year Adjusted Profit (A) Weight (D) Product (E = C * D) 2014-15 6,000 1 6,000 2015-16 4,000 2 8,000 2016-17 10,500 3 31,500 2017-18 6,700 4 26,800 Total 10 72,300

 Weighted Average Profit = Total weight Profit for past given years Total weight = 72,300 10 = 7,230

 Number of years’ purchase = 2 Goodwill = Weighted Average Profit X Number of years’ purchase Goodwill = 7,230 X 3 Goodwill = 21,690

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

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