Question

Formulas for class 12 accounts partnership

Answer 1

hey mate,here are the formulas

Formulas
1. Interest on capital = Opening capital x Rate/100
2. Interest on Drawing
(i) Simple Method:
Interest on Drawing = Amount of Drawing x Rate of Interest/100 x months/12
(ii) Product Method
Interest on Drawings = Total of products x
(iii) Fixed amounts drawn by partners during the month at regular intervals
Rate
100´12
80

(a) If drawings of fixed amount are made on the first day of each month:
Interest on Drawings = Total amount of Drawings x x
(b) If drawings of fixed amount are made in the middle of each month:
Interest on Drawings = Total amount of Drawings x x
(c) If drawings of fixed amount are made on the last day of each month:
Interest on Drawings = Total amount of Drawings x x
3. Methods of Valuation of Goodwill
(i) Average Profit Method:
(a) Simple Average
Goodwill= Average Profit x Number of year’s purchase.
(b) Weighted Average
Goodwill=Weighted average x number of years’ purchase
(ii) Super Profit Method:
Goodwill =Super profits x number of years’ purchase.
(iii) Capitalisation Method
Capitalisation of Average Profits: This involves the following steps:
(i) Ascertain the average profits based on the past few years’ performance.
(ii) Capitalize the average profits on the basis of the normal rate of return to ascertain the
capitalised value of average profits as follows:
Average Profits x 100/Normal rate of Return
(iii) Ascertain the actual capital employed (net assets) by deducting outside liabilities from
the total assets (excluding goodwill).
Capital Employed/Net Assets = Total Assets (excluding goodwill) – Outside Liabilities
(iv) Compute the value of goodwill by deducting net assets from the capitalised value of
average profits, i.e. (ii) – (iii).
Capitalisation of Super Profits:
Goodwill = Super Profits × 100/ Normal Rate of Return
4. Sacrificing Ratio = Old share in profit – New share in profit
5. Gaining Ratio = New share in profit – Old share in profit
Retirement /death of a partner and Dissolution of Partnership Firm
6. New ratio (retirement /death of a partner) = Old share + Acquired share
7. Gaining ratio = New ratio- Old ratio
8. Calculation of share of profit of the deceased partner
(a) On the basis of time:-
Deceased partner’s share= Last year profit/Average profits x period (in months)/12/365
x Deceased partner’s ratio

Note: Period here means from the period from the beginning of the year to the date of
death.
(b) On the basis of sales:- Sales for the period *rate/100 * Decesed partner’ s Ratio.