Question 36 Chapter 3 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 36 Chapter 3 of +2-A

Question 36 Chapter 3 of +2-A

36. Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April 2019. They agreed to value goodwill at 3 years’ purchase of Super Profit Method for which they decided to average profit of the last 5 years. The profits for the last 5 years were:

Year Ended Net Profit  
31st March 2015 1,50,000  
31st March 2016 1,80,000  
31st March, 2017  1,00,000 Including abnormal loss of 1,00,000 
31st March, 2018 2,60,000 Including abnormal gain (profit of 40,000) 
31st March, 2019 2,40,000  

 

The solution of Question 36 Chapter 3 of +2-A

:

Year
Profit/losses
A

Adjustment
B

Actual Profit

(C = A – B)


31 March, 2015 1,50,000 1,50,000
31 March, 2016 1,80,000 1,80,000
31 March, 2017 1,00,000 + 1,00,000 2,00,000
31 March, 2017 2,60,000 – 40,000 2,20,000
31 March 2017 2,40,000 2,40,000
Total 9,90,000

 

Super Profit Actual average Profit- Normal Profit
Actual average Profit = Total Profit for past given years
  = Number of years
  = 9,90,000
5
  = 1,98,000

 

Normal Profit = Capital Employed X Normal Rate of Return
100
  = 15,00,000 X 10
100
  = 1,50,000    

 

Capital Employed = 20,00,000 – 5,00,000
  = 15,00,000
Super Profit = Actual Profit – Normal Profit
  = 1,98,000 – 1,50,000
  = 48,000



Number of years’ purchase = 3

Goodwill = Super Profit X number of years’ purchase
Goodwill = 48,000 x 3
Goodwill  = 1,44,000





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

 

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2 Book 1 min - Question 36 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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