Admission of a Partner Test

Result

Admission of a Partner Test - 68

Score
-
out of -
Rank
-
out of -

TIME Taken - -

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Weekly Quiz Competition

Question 1
1 / -0

On 1st April, 2011 on the admission of a new partner, it is agreed that goodwill of the firm is valued at 3 years purchase of average profits for the last five years. The profits for last 5 years have been as follows:
Year ended Profit / (loss)
31st March 2011 16,110
31st March 2012 11,850
31st March 2013 8,145
31st March 2014 (600)
31st March 2015 12,750
Value of goodwill will be _____________.

A
$$Rs.28,953$$

B
$$Rs.29,673$$

C
$$Rs.28,673$$

D
$$Rs.29,953$$

Solution

Calculation of goodwill :
1. Average profit = Total profit/ No. of years
Average profit = Rs. (16110 + 11850 + 8145 + [-600] + 12750)
Average profit = Rs. 48255/ 5
Average profit = Rs. 9651
2. Goodwill = Average profit * No. of years purchase
Goodwill = Rs. 9651 * 3
Goodwill = Rs. 28953

Question 2

1 / -0

A & B are partners sharing profits and losses in the ratio of $$3:2$$. C joins the firm for $$1/3$$rd share, and is to pay Rs.$$40,000$$ as premium for goodwill but cannot pay anything. As netween A and B, they decided to share profits and losses equally. Goodwill already appearing in balance sheet is $$1,00,000$$ Required journal entry

A Capital A/c Dr. B Capital A/c Dr. To Goodwill A/c	$$72,000$$ $$48,000$$	$$1,20,000$$
Goodwill A/c Dr. To A Capital A/c To B Capital A/c	$$1,20,000$$	$$72,000$$ $$48,000$$
Goodwill A/c Dr. To A Capital A/c To B Capital A/c	$$20,000$$	$$12,000$$ $$8,000$$
Premium for Goodwill A/c Dr. To A Capital A/c To B Capital A/c	$$20,000$$	$$8,000$$ $$12,000$$

A

B

C

D

Question 3

1 / -0

A & B were partners sharing profits & losses in the ratio of $$3:1$$. C was admitted to the firm on the following terms:
C would provide Rs.$$1,00,000$$ as a capital and pay Rs.$$20,000$$ as goodwill for his $$1/3$$rd share in future profits. Goodwill account would not appear in the books. A,B & C would share profits equally. Which of the following journal is correct in relation to premium for goodwill Rs.$$20,000$$ brought in by new partner?

Premium for Goodwill A/c Dr. B Capital A/c Dr. To A Capital A/c	$$20,000$$ $$5,000$$	$$25,000$$
Premium for Goodwill A/c Dr. To A Capital A/c To B Capital A/c	$$20,000$$	$$15,000$$ $$5,000$$
Premium for Goodwill A/c Dr. To A Capital A/c To B Capital A/c	$$20,000$$	$$10,000$$ $$10,000$$
Premium for Goodwill A/c Dr. A Capital A/c Dr. To B Capital A/c	$$20,000$$ $$5,000$$	$$25,000$$

A

B

C

D

Question 4
1 / -0

A & B are sharing profits in the ratio of $$5:3$$. C was admitted on the following terms:
New profit sharing ratio wiill be $$7:5:3$$
Machinery would be appreciated by $$10\%$$ (book value Rs.$$1,80,000$$)
Building would be depreciated by $$6\%$$ (book value Rs.$$1,50,000$$)
To create provision for bad debts $$5\%$$ on Debtors of Rs.$$40,000$$
Find the distribution of profit/loss on revaluation between A & B

A
Profit $$4,083$$ & $$2,917$$

B
Profit $$2,625$$ & $$4,375$$

C
Profit $$2,917$$ & $$4,083$$

D
Profit $$4,375$$ & $$2,625$$
Question 5
1 / -0

The profits and losses for the last four years are:
2011-2012 Losses Rs 10,000
2012-2013 Losses Rs 2,500
2013-2014 Profits Rs 98,000
2014-2015 Profits Rs 76,000

The average capital employed in the business is Rs 2,00,000. The rate of interest expected for capital invested is $$12\%$$. The remuneration of partners is estimated to be Rs 1,000 per month not charged in the above losses/profits. Calculate the value of goodwill on the basis of two years purchase of super profits based on the average of 4 years.

A
Rs 9,000

B
Rs 8,750

C
Rs 8,500

D
Rs 8,250
Question 6
1 / -0

The net profits of a business, after providing for income tax for the last 5 years were: Rs 80,000, Rs 1,00,000, Rs 1,20,000, Rs 1,25,000 and Rs 2,00,000 respectively. The capital employed in the business is Rs 10,00,000 and the normal rate of return is $$10\%$$. Calculate the value of the goodwill on the basis of the annuity method taking the present value of annuity of Rs 1 for 5 years at $$10\%$$ is 3.7907.

A
Rs 84,768

B
Rs 95,768

C
Rs 94,768

D
Rs 60,000
Question 7
1 / -0

Find the goodwill from the following information:
Capital employed - Rs 8,25,000
Rate of normal return - Rs. $$10\%$$
Future Maintainable profit - Rs 1,50,000
Annuity factor - Rs. 3.17

A
Rs 4,75,500

B
Rs 2,61,525

C
Rs 3,13,975

D
Rs 2,13,975
Question 8
1 / -0

Capital employed by a partnership firm is $$Rs.1,00,000$$. Its average profit is $$Rs.20,000$$. Normal rate of return is $$15\%$$. Value of goodwill is _________.

A
$$Rs.33,333$$

B
$$Rs.30,000$$

C
$$Rs.23,333$$

D
$$Rs.43,667$$

Solution

Calculation of goodwill under capitalization basis:
Capital employed = Rs. 100000
Normal rate of return = 15%
Average profit = Rs. 20000
Normal value of business = Average profit/ Normal rate of return
Normal value of business = Rs. 20000/ 15%
Normal value of business = Rs. 133333
Goodwill = Normal value of business - Capital employed
Goodwill = Rs. (133333 - 100000) = Rs. 33333
Question 9
1 / -0

The profits for 2012-2013 is Rs. 2,000; for 2013-2014 is Rs. 26,100 and for 2014-2015 is Rs. 31,200. Closing stock for 2013-2014 and 2014-2015 include the defective items of Rs. 2,200 and Rs. 6,200 respectively which were considered as having market value nil. Calculate goodwill on average profit method.

A
Rs. 23,700

B
Rs. 17,700

C
Rs. 13,700

D
Rs. 17,300

Question 10

1 / -0

On $$1$$st April, $$2014$$ on the admission of a new partner, it is agreed that goodwill of the firm is valued at $$2$$ years purchase of weighted average profits for the last three years. The profits for last $$3$$ years have been as follows:

Year ended	Profits	Weight
31st March 2011	45,000	1
31st March 2012	52,500	2
31st March 2013	72,000	3

Value of goodwill will be ___________.

$$Rs.1,22,000$$

$$Rs.2,22,000$$

$$Rs.1,22,222$$

$$Rs.1,20,000$$

Solution

Calculation of goodwill under weighted average profit basis-

Under this method, average profit my be arrived at by assigning proper weights as below:

Year (1)	Profit (2) (Rs.)	Weight (3)	Weighted profit (4) = (2) * (3) (Rs.)
1	45000	1	45000
2	52500	2	105000
3	72000	3	216000
		6	366000

So, Weighted Average Profit = Rs. 366000/6 =Rs. 61000

Goodwill = Weighted average profit * No. of year's Purchase

Goodwill = Rs. 61000 * 2 years

Goodwill = Rs. 122000

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Year ended	Profit / (loss)
31st March 2011	16,110
31st March 2012	11,850
31st March 2013	8,145
31st March 2014	(600)
31st March 2015	12,750

Admission of a Partner Test - 68

Result

Admission of a Partner Test - 68

Score

-

Rank

-

SHARING IS CARING

Question 1

$$Rs.28,953$$

$$Rs.29,673$$

$$Rs.28,673$$

$$Rs.29,953$$

Solution

Question 2

A

B

C

D

Question 3

A

B

C

D

Question 4

Profit $$4,083$$ & $$2,917$$

Profit $$2,625$$ & $$4,375$$

Profit $$2,917$$ & $$4,083$$

Profit $$4,375$$ & $$2,625$$

Question 5

Rs 9,000

Rs 8,750

Rs 8,500

Rs 8,250

Question 6

Rs 84,768

Rs 95,768

Rs 94,768

Rs 60,000

Question 7

Rs 4,75,500

Rs 2,61,525

Rs 3,13,975

Rs 2,13,975

Question 8

$$Rs.33,333$$

$$Rs.30,000$$

$$Rs.23,333$$

$$Rs.43,667$$

Solution

Question 9

Rs. 23,700

Rs. 17,700

Rs. 13,700

Rs. 17,300

Question 10

$$Rs.1,22,000$$

$$Rs.2,22,000$$

$$Rs.1,22,222$$

$$Rs.1,20,000$$

Solution

User

Question Analysis

My Perfomance

Score

-

Rank

-

Results Announcement on: coming Monday

Stay Tuned: We’ll update you on your result via email or SMS.