Question

Q25. On 10 April 2016 an existing firm had assets of Rs. 75000 inclusing cash of Rs. 5000. The
partners capital account showed a balance of Rs. 60000 and reserve constituted the rest. If the
normal rate of return is 20% and the goodwill of the firm is valued at Rs. 24000 at 4 years
purchase of super profit, find the average profit of the firm.​

Answer 1

Answer:

Normal profit=capital employed×rate of return/100

Capital employed =asset -liability

=75000-60000

=15000

NP=15000×20/100

=3000

Goodwill=super profit×purchase year

24000=SP×4

24000/4 =SP

6000 = SP

Super profit= average profit -normal profit

6000=AP-3000

6000+3000=SP

9000=AP

Average profit =9000

Answer 2

Normal profit=capital employed×rate of return/100

Capital employed =asset -liability

=75000-60000

=15000

NP=15000×20/100

=3000

Goodwill=super profit×purchase year

24000=SP×4

24000/4 =SP

6000 = SP

Super profit= average profit -normal profit

6000=AP-3000

6000+3000=SP

9000=AP

Average profit =9000