Q.13. Compute the value of goodwill on the basis of four years’ purchase of the average profits based on the last five years?

By admin -

Q.13. Compute the value of goodwill on the basis of four years’ purchase of the average profits based on the last five years? The profits for the last five years were as follows:

Rs
201340,000
201450,000
201560,000
201650,000
201760,000

SOLUTION

Average profit= sum of given year’s profit

Number of given years

Rs
201340,000
201450,000
201560,000
201650,000
201760,000

Sum of 5 year’s profit = 2,60,000

Avearage profit = 2,60,000

                                  5 

                          =52,000

         Goodwill = Avearage profit X number of year’s purchase

                        = 52,000 X 4

                       = Rs 2,08,000

Comments

Post a Comment

Popular posts from this blog

Explain the Role of ‘Justice Party’ in Boycotting of Council Elections | bzziii.com

By admin -
answer source Question Read the source given below and answer the questions that follows: Source : The Movement in the Towns The movement started with middle-class participation in the cities. Thousands of students left government-controlled schools and colleges, headmasters and teachers resigned, and lawyers gave up their legal practices. The council elections were boycotted in most provinces except Madras, where the Justice Party, the party of the non-Brahmans, felt that entering the council was one way of gaining some power–something that usually only Brahmans had access to. The effects of non-cooperation on the economic front were more dramatic. Foreign goods were boycotted, liquor shops picketed, and foreign cloth burnt in huge bonfires. The import of foreign cloth halved between 1921 and 1922, its value dropping from Rs. 102 crore to Rs. 57 crore. In many places merchants and traders refused to trade in foreign goods or finance foreign trade. As the boycott movement spread...
Read more

Fraction becomes 9/11, If 2 is Added to Both the Numerator and Denominator. If 3 is Added to Both the Numerator and the Denominator, it Becomes 5/6. Find the Fraction. | Bzziii.com

By admin -
A fraction becomes `9/11`, if 2 is added to both the numerator and denominator. If 3 is added to both the numerator and the denominator, it becomes `5/6`. Find the fraction. SOLUTION Let Numerator be x & Denominator be y So, Fraction is = `x/y` Given that, If 2 is added to both the numerators and denominator, fraction becomes `9/11` `"Numerators + 2"/"Denominator + 2"`= `9/11` `"x+ 2"/"y + 2"`= `9/11` 11 (`x + 2`) = 9 (`y + 2`) 11`x` + 22 = 9`y` + 18 11`x` - 9`y` = 11 - 22 11`x` - 9`y` = -4 .......(1) Also, Given that if 3 is added to both the numerator and the denominator, fraction become `5/6` `"Numerators + 3"/"Denominator + 3"`= `5/6` `"x+ 3"/"y + 3"`= `5/6` 6 (`x + 3`) = 5 (`y + 3`) 6`x` + 18 = 5`y` + 15 6`x` - 5`y` = 15 - 18 6`x` - 5`y` = - 3 .......(2) Hence, our equations are 11`x` - 9`y` = -4 .......(1) 6`x` - 5`y` = - 3 .......(2) From equation (1...
Read more

NCERT solutions for Class 11 chapter 3 - Recording of Transactions

By admin -
Chapter 3 Recording of Transactions   Short Answer 01    State the three fundamental steps in the accounting process. SOLUTION 02    Why is the evidence provided by source documents important to accounting? SOLUTION 03    Should a transaction be first recorded in a journal or ledger? Why? SOLUTION 04    Are debits or credits listed first in journal entries? Are debits or credits indented? SOLUTION 05    Why are some accounting systems called double accounting systems? SOLUTION 06    Give a specimen of an account. SOLUTION 07    Why are the rules of debit and credit same for both liability and capital? SOLUTION 08    What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts? SOLUTION 09    What entry (debit or credit) would you make to: (a) increase revenue (b)...
Read more