Page 108 - MA12

M.14 Management Accounting (Section B)—ISC XII

(b) (i) Goodwill at 3 years’ Purchase of Average Profit:
` 1,90,000 + ` 2,20,000 + ` 2,50,000
Average Profit = = ` 2,20,000
3
Average Profit for Goodwill = ` 2,20,000 – Management Cost
= ` 2,20,000 – ` 1,00,000 = ` 1,20,000
Goodwill = Average Profit × Number of Years’ Purchase
= ` 1,20,000 × 3 = ` 3,60,000.
(ii) Goodwill at 2 Years’ Purchase of Super Profit:
Normal Profit = Capital Employed × Normal Rate of Return/100
= ` 4,00,000 × 15/100= ` 60,000
Super Profit = Average Profit – Normal Profit
= ` 1,20,000 – ` 60,000 = ` 60,000
Goodwill = Super Profit × Number of Years’ Purchase
= ` 60,000 × 2 = ` 1,20,000.
(iii) Goodwill under Capitalisation of Super Profit:
100
Goodwill = Super Profit ×
Normal Rate of Return
= ` 60,000 × 100/15 = ` 4,00,000.
6.
Dr. REALISATION ACCOUNT Cr.
Particulars ` Particulars `
To Debtors A/c 1,70,000 By Sundry Creditors A/c 80,000
To Stock A/c 1,50,000 By Ram’s Brother’s Loan A/c 80,000
To Investments A/c 2,50,000 By Provision for Doubtful Debts A/c 20,000
To Building A/c 2,50,000 By Investment Fluctuation Fund A/c 50,000
To Goodwill A/c 1,00,000 By Bank A/c (Assets Realised)
To Ram’s Capital A/c (Ram’s Brother’s Loan) 80,000 Debtors (80% of ` 1,50,000) 1,20,000
To Bank A/c: Investments (80% of ` 2,50,000) 2,00,000
Creditors (` 80,000 – ` 20,000) 60,000 Goodwill (60% of ` 1,00,000) 60,000
To Bank A/c (Realisation Expenses) 20,000 Building (` 3,00,000 – ` 10,000) 2,90,000
Stock (WN 2) 50,000 7,20,000
By Rahim’s Capital A/c (WN 1) 40,000
By Loss transferred to:
Ram’s Capital A/c 72,000
Rahim’s Capital A/c 18,000 90,000
10,80,000 10,80,000
Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars Ram (`) Rahim (`) Particulars Ram (`) Rahim (`)
To Profit and Loss A/c 80,000 20,000 By Balance b/d 5,00,000 4,00,000
To Realisation A/c (Stock) ... 40,000 By Realisation A/c (Brother’s Loan) 80,000 ...
To Realisation A/c (Loss) 72,000 18,000
To Bank A/c (Final Payment) 4,28,000 3,22,000
5,80,000 4,00,000 5,80,000 4,00,000

Dr. RAHIM’S LOAN ACCOUNT Cr.
Particulars ` Particulars `
To Bank A/c 30,000 By Balance b/d 30,000
30,000 30,000