# Question 13 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 13 Chapter 3 of +2-A

13. Profits of a firm for the year ended 31st March for the last five years were:

 Year Ended 31st March 2015 31st March 2016 31st March 2017 31st March 2018 31st March 2019 Profit/(Loss) 20,000 24,000 30,000 25,000 18,000

Calculate the value of goodwill on the basis of three years’ purchase of Weighted Average Profit after assigning weights 1, 2, 3, 4 and 5 respectively to the profits for years ended 31st
March, 2015, 2016, 2017, 2018 and 2019.

The solution of Question 13 Chapter 3 of +2-A

:

 Year ProfitA WeightB Product(C = A * B) 2015 20,000 1 20,000 2016 24,000 2 48,000 2017 30,000 3 90,000 2018 25,000 4 1,00,000 2019 18,000 5 90,000 Total 15 3,48,000

 Average Profit = Total Profit for past given years Number of years

 = 3,48,000 15 = 23,200

Number of years’ purchase = 3

 Goodwill = Average Profit X Number of years’ purchase Goodwill = 23,200 X 3 Goodwill = 69,600

### T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

### T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement

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