On 1st April 2023, an existing firm had assets of ₹ 75,000 including cash of ₹ 5,000. Its creditors amounted to ₹ 5,000 on that date. The firm had a Reserve of ₹ 10,000 while Partner’s Capital Accounts showed a balance of ₹ 60,000.
On 1st April 2023, an existing firm had assets of ₹ 75,000 including cash of ₹ 5,000. Its creditors amounted to ₹ 5,000 on that date.
The firm had a Reserve of ₹ 10,000 while Partner’s Capital Accounts showed a balance of ₹ 60,000.
If the Normal Rate of Return is 20% and the goodwill of the firm is valued at ₹ 24,000 at four years’ purchase of super profit, find the average profit per year of the existing firm.
[Ans.: Capital Employed – ₹ 70,000; Normal Profit – ₹ 14,000; Super Profit – ₹ 6,000; Average Profit = Normal Profit + Super Profit = ₹ 20,000.]
Anurag Pathak Changed status to publish April 17, 2023
