Question : Bharat and Bhushan are partners in a retail business. Balances in their Capital and Current Accounts as on 31st March, 2020 were:
| Capital Account | Current Account |
| Bharat Rs. 2,00,000 |
Rs. 50,000 |
| Bhushan Rs. 2,40,000 |
Rs. 10,000 (Dr.) |
The firm earned an average profit of Rs. 90,000. If the normal rate of return is 10%, value of goodwill.
Option 1: Rs 4,20,000
Option 2: Rs 4,10,000
Option 3: Rs 13,80,000
Option 4: None of these
Correct Answer: Rs 4,20,000
Solution : Answer = 4,20,000
Capitalised Value of the Business = = Rs. 90,000 x = Rs. 9,00,000
Capital employed R= 2,00,000+2,40,000+50,000-10,000=4,80,000
Goodwill =Rs 9,00,000-4,80,000= Rs 4,20,000.
Hence, the correct option is 1.
Related Questions
Question : Chain and Harsha were partners in a firm sharing profits in the ratio of 3: 2. On 1-4-2014 their Balance Sheet was as follows :
| Balance Sheet of Charu and Harsha as on 1st April, 2014 | |||
| Liabilities | Amount(Rs) | Assets | Amount(Rs) |
| Creditors | 17,000 | Cash | 6,000 |
| General Reserve | 4,000 | Debtors | 15,000 |
| Workmen Compensation Fund | 9,000 | Investments | 20,000 |
| Investment Fluctuation Fund | 11,000 | Plant | 14,000 |
| Provision for bad debts | 2,000 | Land & buildings | 38,000 |
| Capitals: | |||
| Charu- 30,000 | |||
| Harsha- 20,000 | 50,000 | ||
| 93,000 | 93,000 | ||
On the above date Vaishali was admitted for 1/4 th share in the profits of the firm on the following terms :
(a) Vaishali will bring Rs.20,000 for her capital and Rs.4,000 for her share of goodwill premium.
(b) All debtors were considered good.
(c) The market value of investments was Rs. 15,000.
(d) There was a liability of Rs.6,000 for workmen compensation.
(e) Capital accounts of Charu and Harsha are to be adjusted on the basis of Vaishali's capital by opening current accounts.
Question:
Amount distributed among the old partners capital account in Respect of Investment fluctuating fund.
Option 1: debiting charu's capital account with Rs 36,00 and harsha with Rs 2,400
Option 2: crediting Charu's Capital account with Rs 3,600 and Harsh with Rs 2,400
Option 3: crediting Charu's capital account with Rs 6,600 and Harsh's with Rs 4,400
Option 4: None of these
Question : Chain and Harsha were partners in a firm sharing profits in the ratio of 3: 2. On 1-4-2014 their Balance Sheet was as follows :
| Balance Sheet of Charu and Harsha as on 1st April, 2014 | |||
| Liabilities | Amount(Rs) | Assets | Amount(Rs) |
| Creditors | 17,000 | Cash | 6,000 |
| General Reserve | 4,000 | Debtors | 15,000 |
| Workmen Compensation Fund | 9,000 | Investments | 20,000 |
| Investment Fluctuation Fund | 11,000 | Plant | 14,000 |
| Provision for bad debts | 2,000 | Land & buildings | 38,000 |
| Capitals: | |||
| Charu- 30,000 | |||
| Harsha- 20,000 | 50,000 | ||
| 93,000 | 93,000 | ||
On the above date Vaishali was admitted for 1/4 th share in the profits of the firm on the following terms :
(a) Vaishali will bring Rs.20,000 for her capital and Rs.4,000 for her share of goodwill premium.
(b) All debtors were considered good.
(c) The market value of investments was Rs. 15,000.
(d) There was a liability of Rs.6,000 for workmen compensation.
(e) Capital accounts of Charu and Harsha are to be adjusted on the basis of Vaishali's capital by opening current accounts.
Question:
Amount distributed amongst the old partners In respect of workmen's compensation fund will be
Option 1: Crediting old partners capital Account with Rs 2,000 and Rs 1,000
Option 2: crediting the old partner's capital account with Rs 1,800 and Rs 1,200
Option 3: debiting old partner's capital account with Rs 1,800 and Rs 1,200
Option 4: None of the above
