Question : Cake and Muffin are partners sharing profits and losses in the ratio of 5: 4. On 1st April, 2016, they admit Cookie as a new partner for 1/6th share in the profits of the firm and the new ratio agreed upon is 3: 2: 1.
Goodwill, at the time of Cookie's admission is to be valued on the basis of capitalisation of the average profits of the last three years. Profits for the last three years were : Year ended 31st March, 2014 Rs.39,000 (including an abnormal loss of Rs. 9,000). Year ended 31st March, 2015 Rs.83,000 (including an abnormal gain of Rs.8,000). Year ended 31st March, 2016 Rs.72,000. On 1st April, 2016, the firm had assets of Rs.8,00,000. Its creditors amounted to Rs.3,60,000. The firm had a Reserve Fund of Rs. 40,000 while Partners' Capital Accounts showed a balance of Rs.4,00,000. The normal rate of return expected from this class of business is 13%. Cookie brings in Rs.2,00,000 for her capital but is unable to bring in cash for her share of goodwill.
The amount of cookie brought his share of goodwill will be .....
Option 1: Rs 60,000
Option 2: Rs 50,000
Option 3: Rs 10,000
Option 4: None of the above
Correct Answer: Rs 10,000
Solution : Answer = Rs 10,000 (i) Calculation of Cookie's Share of Goodwill in the firm :
Calculation of Average Normal Profit:
Average normal profit=$\frac{71,95,000}{3}$= Rs 65,000 Capitalised value of average profits= $\frac{\text { Average Normal Profit }}{\text { Normal Rate of Return }} \times 100$= $\frac{3,65,000}{13}$×100= Rs 5,00,000. Capital employed (Net assets)= Total assets - Outside liabilities = Rs 8,00,000 - Rs 3,60,000= Rs 4,40,000. Goodwill = Capitalised Value of Average Profits - Net Assets = Rs 5,00,000-Rs 4,40,000= Rs 60,000. Cookie's share of goodwill= Rs 60,000×$\frac{1}{6}$= Rs 10,000. Hence, the correct option is 3.
Question : Krishna and Suresh were partners in a firm sharing profits in the ratio of 3: 1. With a capital of Rs 3,00,000 and Rs 2,00,000. On 1st April, 2015 they admitted Rahul as a new partner for 1/5 th share in profits of the firm. On the date of Rahul's admission the Balance Sheet of Krishna and Suresh showed a General Reserve of Rs. 1,20,000, a debit balance of Rs.60,000 in Profit and Loss A/c and Workmen Compensation Reserve of Rs. 1,50,000. The following was agreed upon on Rahul's admission : (i) Rahul will bring Rs. 1,50,000 as his capital and his share of goodwill premium in cash. (ii) Goodwill of the firm be valued at Rs.2,40,000. (iii) There was a claim of Workmen Compensation for Rs. 1,70,000, (iii) The partners decided to share future profits in the ratio of 3: 1: 1. The balance of partners capital after all adjustment and after admitted new partners will be
Option 1: Krishna's capital Rs 3,66,000 and Suresh 2,22,000 and Rahul Rs 1,50,000
Option 2: Krishna's capital account Rs 3,06,000 and Suresh Rs 2,02,000 Rahul Rs 1,50,000
Option 3: K's capital Rs 4,26,000 and Suresh Rs 3,42,000 and Rahul Rs 1,50,000
Question : A, B and C are sharing profits in the ratio of 4:3:2. A dies on 31st December 2017. Accounts are closed on 31st March every year. Sales for the year ending 31st March 2017 amounted to Rs.4,00,000. Sales of Rs.3,30,000 amounted between the period from 1st April 2017 to 31st December 2017. The profit for the year ending 31st March 2017 amounted to Rs.60,000.
The deceased partner’s share in the current year’s profits of the firm will be
Option 1: Rs 24,000
Option 2: Rs 18,000
Option 4: Rs 22,000
Question : A and B are partners in a firm sharing profits in the ratio of 7: 5. On April 1,2017 they admit $C$ as a new partner for $\frac{1}{6}$ th share. The new ratio will be 13:7:4.
C contributed the following assets towards his capital and for his share of goodwill : Stock Rs.60,000; Debtors Rs.80,000; Land Rs.2,00,000; Plant and Machinery Rs. 1,20,000. On the date of admission of $C$, the goodwill of the firm was valued at Rs. 7,50,000 The amount of capital contributed by the new partner will be----
Option 1: Rs 4,60,000
Option 2: Rs 3,35,000
Option 3: Rs 4,00,000
Option 4: Rs 4,50,000
Question : P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided under the partnership deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profits credited to his account during the last 4 completed years (books of accounts are closed on 31st March). R died on 1st April, 2018. The firm's profits for the last 4 years were as follows: 2015 (Profits Rs. 1,20,000); 2016 (Profits Rs.60,000); 2017 (Losses Rs.20,000) and 2018 (Profits Rs. 80,000). The amount that should be credited to R in respect of his share of goodwill will be
Option 1: Rs 45,000
Option 2: Rs 90,000
Option 3: Rs 40,000
Option 4: None of the above.
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