# Question 31 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 31 Chapter 3 of +2-A

31. Capital of the firm of Sharma and Verma is 2,00,000 and the market rate of interest is 15%. Annual salary to partners is 12,000 each. The profits for the last three years were 60,000; 72,000 and 84,000. Goodwill is to be valued at 2 years’ purchase of the last 3 years’ average super profit.
Calculate the goodwill of the firm.

The solution of Question 31 Chapter 3 of +2-A

:

 Year Profit beforePartners’RemunerationA Partners’RemunerationD Actual ProfitafterRemuneration(C = A – B) 2017 60,000 24,000 36,000 2018 72,000 24,000 48,000 2019 84,000 24,000 60,000 Total 1,44,000

 Super Profit = Actual average Profit- Normal Profit Actual average Profit = Total Profit for past given years = Number of years = 1,44,000 3 = 48,000

 Normal Profit = Capital Employed X Normal Rate of Return 100
 = 2,00,000 X 15 100 = 30,000

 Super Profit = 48,000- 30,000 = 18,000

Number of years’ purchase = 2

 Goodwill = Super Profit X number of years’ purchase Goodwill = 18,000 x 2 Goodwill = 36,000

### 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)

• 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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