Question 33 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 33 Chapter 3 of +2-A

Question 33 Chapter 3 of +2-A

33.On 1st April, 2019, an existing firm had assets of 75,000 including cash of
5,000. Its creditors amounted to 5,000 on that date. The firm had a Reserve of 10,000 while Partners’ Capital Accounts showed a balance of 60,000. If Normal Rate of Return is 20% and goodwill of the firm is valued at 24,000 at four years’ purchase of super profit, find average profit per year of the existing firm.

 

The solution of Question 33 Chapter 3 of +2-A

:

Capital Employed Total Assets – Creditors
  = 75,000 – 5,000
  = 70,000

 

Normal Profit = Capital Employed X Normal Rate of Return
100
  = 70,000 X 20
100
  = 14,000    

 

Goodwill of Firm = 24,000 (Given)

 

Normal Profit = Firm Goodwill
Number of Year of Purchases
  = 24,000
4
  = 6,000

 

Average Profit = Normal Profit + Super Profit
  = 14,000 + 6,000
  = 20,000

 

 



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 33 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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