lang pronts and losses in the ratio of 2:1. They decide to take
C into partnership for 1/4th share on 1st January, 2010. For this purpose, goodwill is to be
valued at four times the average annual profits of the previous four or five years whichever is
highér. The agreed profits for goodwill purpose of the past five years are:
2005-Rs. 14,000; 2006-Rs. 15,500; 2007-Rs. 10,000; 2008-Rs. 16,000; 2009—Rs. 15,000.
Find out the value of goodwill.
(Goodwill-Rs. 56,500)
Answers
The net income reported on the income statement for the year was Rs.1,10,000 and depreciation of fixed assets for the year was Rs.44,000. The balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
End of the Year (Rs.) Beginning of the Year ( Rs.) Cash Debtors Inventories
Prepaid Expenses Accounts Payable 1,30,000
2,00,000
2,90,000
15,000
1,02,000
1,40,000
1,80,000
3,00,000
16,000
1,16,000
Calculate total cash from operation activities.
(b) From the following particulars, you are required to calculate : (i) Current Ratio (ii) Net Profit Ratio (iii) Gross Profit Ratio Net Sales : Rs.1,40,000; Gross Profit :Rs.10,000; Net Profit :Rs.6,000; B/R : Rs.2000 ;
Debtors:Rs.8,000; Stock: Rs.10,000; Cash: Rs.6000; Creditors:Rs.12,000; B/P:Rs.8,800company had a balance of Rs.4,0,5000 on 1stJanuary ,2018 in its machinery account ,10% per annum depreciation was charged by diminishing balance method .On the 1st July ,2018 the company sold a part of the machinery for Rs.87,500 ( which was purchased on 1st January ,2016 for Rs.1,20,000) and on the same date , the company purchased a new machinery for Rs.2,50,000 .On 31st December ,2018 the directors of the company decided to adopt the fixed instalment method of depreciation as per AS-10( Revised) instead of diminishing balance method; the rate of no. 1 idiot depreciation schedule for the next few days and I will be depreciation remaining the same. Prepare Machinery Account in the books of the company for the year ended ,2018.