Page 359 - MA-12

M.50 Management Accounting (Section B)—ISC XII

(b) CALCULATION OF PAST ADJUSTED PROFITS
Particulars 2015–16 (`) 2016–17 (`) 2017–18 (`) 2018–19 (`)

Profits as per Books 1,01,000 1,24,000 1,00,000 1,40,000
Less: Management Cost 24,000 24,000 24,000 24,000
77,000 1,00,000 76,000 1,16,000
Less: Overvaluation of Closing Stock ... 12,000 ... ...
77,000 88,000 76,000 1,16,000
Add: Overvaluation of Opening Stock ... ... 12,000 ...
77,000 88,000 88,000 1,16,000
Add: Major repair of plant to be treated as
Capital Expenditure ... ... 30,000 ...
77,000 88,000 1,18,000 1,16,000
Less: Depreciation on Capital Expenditure
@ 10% on time basis by w.d.v. method ... ... 1,000 2,900
77,000 88,000 1,17,000 1,13,100
Less: Sale Proceeds of Machinery wrongly
credited to Profit and Loss A/c ... 11,000 ... ...
77,000 77,000 1,17,000 1,13,100
Add: Depreciation on above Sold Machinery ... 1,000 900 810
Adjusted Profit(P) 77,000 78,000 1,17,900 1,13,910

CALCULATION OF WEIGHTED PROFIT
Year Ended Profits (`) Weight Weighted Profit (`)
31st March, 2016 77,000 1 77,000
31st March, 2017 78,000 2 1,56,000
31st March, 2018 1,17,900 3 3,53,700
31st March, 2019 1,13,910 4 4,55,640
Total 10 10,42,340

` 10,42,340
Weighted Average Profit = = ` 1,04,234
10
Goodwill = Weighted Average Profit × Number of Years’ Purchase
= ` 1,04,234 × 3 = ` 3,12,702.
3. (a)
Dr. KARAM’S CAPITAL ACCOUNT Cr.
Particulars ` Particulars `
To Karam’s Executors’ A/c (Balancing Figure) 3,65,000 By Balance b/d 1,20,000
By Profit and Loss Suspense A/c (WN 1) 4,000
By Interest on Karam’s Loan A/c 1,000*
By Karam’s Loan A/c 1,00,000
By Priya’s Capital A/c (Goodwill) (WN 2) 90,000
By Anna’s Capital A/c (Goodwill) (WN 2) 30,000
By Priya’s Capital A/c (` 20,000 × 3/4 )(WN 3) 15,000
By Anna’s Capital A/c (` 20,000 × 1/4 )(WN 3) 5,000
3,65,000 3,65,000
*` 1,00,000 × 5/100 × 73/365 = ` 1,000.