Question

please give me full ans with accounts​

Answer 1

Answer:

Refer the attachments.

[First attachment includes the (1) Profit and Loss adjustment account and Second attachment includes (2) Manish's Capital A/c.]

(3) Working of Manish's share in profit and goodwill:

• Calculation of Manish's share in profit:

Share of profit = Goodwill of the firm × profit sharing ratio × period

= 60,000 × 1/5 × 6/12

= Rs. 6,000

• Calculation of share of goodwill of Manish:

a) Average profit = Total profit/ No. of years

= (1,60,000 + 1,10,000 + 90,000 + 60,000)/4

= 4,00,000/4

= 1,00,000

b) Goodwill of firm = Average profit × no. of year purchases

= 1,00,000 × 2

= 2,00,000

c) Share of Goodwill of Manish = Goodwill of the firm × Manish's share

= 2,00,000 × 1/5

= Rs. 40,000