Question

(c) Calculate goodwill of a firm on the basis of three years' purchase of the weighted
average profit of the last four years. Profits for the last four years are as under:
Year Ended 31st March, 2015 31st March, 2016
31st March, 2017 31st March, 2018
Profits
1,60,000
1,80,000
2,10,000
*2,20,000
The weights assigned to each year ended 31st March, 2015--1; 31st March,
2016-2; 31st March, 2017-3; and 31st March, 2018-4.
Additional Information:
(i) In the year ended 31st March, 2017, some old furniture having a book value
of 15,000 was disposed off for 5,000.
(ii) Profit on sale of furniture credited to Profit and Loss Account was 5,000 in
the year ended 31st March, 2016.
(iii) Closing Inventory was overvalued as follows:
2015-16: 2,000; 2016-17:33,000; 2017-18: 75,000.​

Answer 1

Answer:

last four years. Profits for the last four years are as under:

Year Ended 31st March, 2015 31st March, 2016

31st March, 2017 31st March, 2018

Profits

1,60,000

1,80,000

2,10,000

*2,20,000

The weights assigned to each year ended 31st March, 2015--1; 31st March,

2016-2; 31st March, 2017-3; and 31st March, 2018-4.

Additional Information:

(i) In the year ended 31st March, 2017, some old furniture having a book value

of 15,000 was disposed off for 5,000.

(ii) Profit on sale of furniture credited to Profit and Loss Account was 5,000 in

the year ended 31st March, 2016