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Question 4 Chapter 3 of Class 12 Part – 1 VK Publication

Question 4 Chapter 3 of Class 12 Part - 1 VK Publication
Question 4 Chapter 3 of Class 12 Part - 1 VK Publication

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Question 4 Chapter 3 of Class 12 Part – 1

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4. Kaku purchased Polu’s business on 1st April, 2018. The profits for the last five years are:
31st March, 2014- Rs. 37,000
31st March, 2015- Rs. 47,000 (after charging an abnormal loss of theft of Rs. 4,000)
31st March, 2016- Rs. 53,000 (including an abnormal gain of Rs. 5,000)
31st March, 2017- Rs. 60,000 (including a profit of lottery Rs. 6,000)
31st March, 2018- Rs. 70,000 (after charging Rs. 10,000 a loss of furniture destroyed by fire)
Calculate the value of goodwill on the basis of two years purchase of the average profit of the last five years.

The solution of Question 4 Chapter 3 of Class 12 Part – 1: –

Particulars 

31st March , 2014

31st March, 2015

31st March , 2016

31st March , 2017

31st March, 2018
Net Profit37,00047,00053,00060,00070,000
Add: Abnormal Loss4,000
Less: Abnormal Gain5,000
Less: Profit of Lottery6,000
Add: Loss by Fire10,000
Adjusted Profit37,00051,00048,00054,00080,000

 

Average Profit=Total Profits
Number of years
   
 =37,000+51,000+48,000+54,000+80,000
 5
   
 =2,70,000
 5
   
 =54,000

Goodwill = Average Profit x Number of Years’ Purchase = 54,000 x 2 = Rs. 1,08,000.

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

 

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Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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