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On 1st April 2018, the firm had assets of ₹ 1,00,000 excluding stock of ₹ 20,000.

The current liabilities were ₹ 10,000 and the balance constituted Partner’s Capital Accounts.

If the normal rate of return is 8%, the Goodwill of the firm is valued at ₹ 60,000 at four years’ purchase of super profit, find the actual profits of the firm.

[Ans.: Capital Employed – ₹ 1,10,000; Normal Profit – ₹ 8,800; Average Actual Profit – ₹ 23,800.]

Anurag Pathak Changed status to publish April 18, 2023
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