Question 23 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 23 Chapter 3 of +2-A

Question 23 Chapter 3 of +2-A

23. The total capital of the firm of Sakshi, Mehak and Megha is 1,00,000 and the market rate of interest is 15%. The net profits for the last 3 years were 30,000; 36,000 and 42,000. Goodwill is to be valued at 2 years’ purchase of the last 3 years’ super-profits. Calculate the goodwill of the firm.

 

The solution of Question 23 Chapter 3 of +2-A

:

Super Profit Actual average Profit- Normal Profit

 

Normal Profit = Total Profit for past given years
Number of years
  = 30,000+ 36,000+ 42,000
3
  = 1,08,000
3
  = 36,000

 

Normal Profit = Capital Employed X Normal Rate of Return
100
  = 1,00,000 X 15
100
  = 15,000    
Super Profit = 36,000 – 15,000    
  = 21,000    

 

 

Number of years’ purchase = 2

Goodwill = Super Profit X number of years’ purchase
Goodwill = 21,000 X 3
Goodwill  = 42,000

 



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)

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

 

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

2 Book 1 min - Question 23 Chapter 3 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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