A, B and C were partner's in a firm sharing profit and losses in the Ratio of 5 : 3 : 2 . They admitted D into partnership for 1/5 share of profit whi - Accountancy MCQ CUET Accountancy 2022 23 Aug Shift 2 PYQs 2026 | ExamTest.live

hardMCQCUET Accountancy 2022 23 Aug Shift 2 PYQs2026Accountancy

1 mark

A, B and C were partner's in a firm sharing profit and losses in the Ratio of 5 : 3 : 2 . They admitted D into partnership for 1/5 share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash. Capital brought in by is Rs. 50, 000 . On the date of admission the Balance Sheet of A, B and C was as follows :Balance Sheet as on 31st March, 2021 Goodwill is to be valued at 3 years purchase of average profit of last 4 years which were Rs. 60, 000 (2017-18), Rs. 60, 000 (18-19), Rs. 30, 000 (19-20). On revaluation it was found that all debtors are good.From the above calculate amount of Goodwill :

Solution & Step-by-step Explanation

Goodwill is 3 years' purchase of average profit of the last 4 years.The profits provided in the question are for 3 years:2017-18: Rs. 60, 000 2018-19: Rs. 60, 000 2019-20: Rs. 30, 000 For the 4th year (2020-21), we look at the Balance Sheet. "Profit and Loss A/c" appears on the Assets side, which means it is a Loss of Rs. 30, 000 .Total Profit = 60, 000 + 60, 000 + 30, 000 - 30, 000 = Rs. 1, 20, 000 .Average Profit = \frac{1 , 20 , 000}{4} = Rs. 30, 000 .Goodwill = Average Profit \times 3 = 30, 000 \times 3 = Rs. 90, 000 .

Try it yourself before checking the explanation above.

A, B and C were partner's in a firm sharing profit and losses in the Ratio of 5 : 3 : 2 . They admitted D into partnership for 1/5 share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash. Capital brought in by is Rs. 50, 000 . On the date of admission the Balance Sheet of A, B and C was as follows :Balance Sheet as on 31st March, 2021 Goodwill is to be valued at 3 years purchase of average profit of last 4 years which were Rs. 60, 000 (2017-18), Rs. 60, 000 (18-19), Rs. 30, 000 (19-20). On revaluation it was found that all debtors are good.From the above calculate amount of Goodwill :

1, 00, 000

95, 500

1, 15, 500

90, 000

Practice with timed mock tests and track your performance across Accountancy.