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M.448 An Aid to Accountancy—CBSE XII

Note: An amount at least equal to 25% of the Nominal Value of Debentures Outstanding is credited to
Debentures Redemption Reserve Account. Investment is made in specified securities of an amount
equal to at least 15% of the nominal value of debentures to be redeemed.
11. (i) Goodwill of the Firm = Average Profit of last 5 years × No. of Years’ Purchase

Year Ended Profit (`)
31st March, 2014 40,000

31st March, 2015 50,000
31st March, 2016 60,000
31st March, 2017 70,000
31st March, 2018 (70,000)
Total Profit 1,50,000

` 1,50,000
Average Profit = = ` 30,000
5
Goodwill of the Firm = ` 30,000 × 3 = ` 90,000
5
Ram’s Share of Goodwill = ` 90,000 × = ` 45,000, which is contributed by
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Mohan and Sohan in their gaining ratio of 3 : 2. Thus,

3
Mohan’s Contribution = ` 45,000 × = ` 27,000, and
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2
Sohan’s Contribution = ` 45,000 × = ` 18,000.
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(ii) Ram’s Share of Profit/(Loss) till the date of his death:
Profit-sharing Ratio of Ram, Mohan and Sohan = 5 : 3 : 2.
Ram’s Date of Death = 30th June, 2018
Time period from 1st April, 2018 to 30th June, 2018 = 3 months
Ram’s Share of Profit/(Loss) = Last Year’s Profit × Ram’s Share × Time Period
5 3
= (` 70,000) × ¥ = ` 8,750 (Loss).
(iii) 10 12
Dr. RAM’S CAPITAL ACCOUNT Cr.

Particulars ` Particulars `
To Profit and Loss A/c (` 70,000 × 5/10) 35,000 By Balance b/d 40,000
To Profit and Loss Suspense A/c (Loss) 8,750 By General Reserve A/c (` 70,000 × 5/10) 35,000
To Ram’s Executors’ A/c 81,250 By Workmen Compensation Reserve A/c 5,000
(Balancing Figure) [5/10(` 18,000 – ` 8,000)]
By Mohan’s Capital A/c (Goodwill) 27,000
By Sohan’s Capital A/c (Goodwill) 18,000
1,25,000 1,25,000