Page 199 - VIRANSH COACHING CLASSES

Working Notes:
1. Calculation of Share of Profit
Profit of current year = Average of the profit of last 2 year

70,000 +50,000 1,20,000
= 2 = 2 = ` 60,000

Profit for proportionate period from 1st April 2019

3
to 1 July 2019 = 60,000 × 12 = ` 15,000
st

1
Mukta’s share in proportionate profit = 15,000 × = ` 3,750
4

2. Valuation of Goodwill
Total profit of 4 year = 15,000 + 1,30,000 + 70,000 + 50,000
4,00,000
Average Profit = 4 = ` 1,00,000

Goodwill = Average Profit × No. of Year Purchases
1,00,000 × 3

1
Mukta’s share in Goodwill = 3,00,000 × = ` 75,000
4

2. Rakesh, Mahesh and Mukesh were partners sharing Profits and Losses in the ratio 3:2:1
st
respectively. Their Balance Sheet as on 31 March 2019 is as under.
st
Balance Sheet as on 31 March 2019
Liability Amt (`) Assets Amt (`)

Capital A/c : Plant & Machinery 40,000
Rakesh 30,000 Motor Truck 20,000
Mahesh 20,000 Debtors 16,000
Mukesh 10,000 Less: R.D.D. 2,000 14,000
Creditors 8,000 Investment 18,000
Bank Loan 20,000 Bank 14,000
Bills Payable 18,000
1,06,000 1,06,000

Mukesh died on 30th June 2019 and the following adjustment were made

1. Assets were revalued as : Plant & Machinery ` 44,000, Motor Truck ` 18,000, Investment
` 17,000.

2. All Debtors were good.
3. Goodwill of the firm valued at two times the average profits of the last five years. No Goodwill
account to be shown in the books of the firm.

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