Question

A firm had Assets of Rs 1,50,000 partner’s capital account showed a balance of Rs 1,20,000 and reserves constituted the rest . If normal rate of return is 10% per annum and Goodwill is valued at Rs 48,000 at four years purchase of super profits , find the super profit of firm. (1)
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Answer 1

Answer:

goodwill= super profit × number of year purchase

48000= super profit ×4

super profit = 48000/4

= 12000

Answer 2

On 1
st
April,2018, an existing firm had assets of Rs.75,000 including cash of Rs.5,000. Its credit amounted to Rs.5,000 on that date. The firm had a Reserve of Rs. 10,000 while Partners capital Account showed a balance of Rs.60,000. If Normal rate of Return is 20% and goodwill of the firm is valued at Rs.24,000 at four years purchase of super profit, find average profit per year of the existing firm.