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Questions Bank 4. The Goodwill is to be valued at two years' purchase of last four years' average profit. The profits were R.O 40, 000, R.O 32,000, R.O 15,000 and R.O 13,000 respectively. Find out the value of goodwill 5. Goodwill of a firm is to be valued at two years' purchase of three years' average profits. The profits of the last three years were: 2000 RO. 30,000, 2001-RO. 40,000 and 2002 - RO. 35,000. Calculate the amount of goodwill. 6. The average net profits expected in future by Khalifa and Co. are RO. 30,000 per year. The average capital employed in the business by firm is RO. 200,000. The normal rate of return on the capital employed in similar business is 10% Calculate goodwill of the firm by: 1. Super Profit Method on the basis of two-year purchase 2. Capitalization Method dos o decer 1. Show how the following items will appear in the capital accounts of the partners Ali and Ahmed when their capital is a) fixed b) fluctuating Particulars Capital on 1.4.2015 Drawings during 2015-2016 Interest on drawings Interest on capital Partner's salary Commission Share of profit for 2015-16 Ahmed(R.O) 70000 9000 270 4200 Ali (R.O) 90000 12000 360 5400 12000 6000 4000 6000 Questions Bank 3. Raja and Sam were partners in a firm sharing profits in the ratio of their capitals contributed on commencement of business which were RO. 80,000 and RO. 60,000 respectively. The firm stared business on April 1, 2001. According to the partnership agreement interest on capital and drawings are 12% and 10% p.a. respectively. Raja and Sam are to get a monthly salary of RO. 2,000 and RO. 3,000 respectively. The profits for year ended March 31, 2002 before making above appropriation was RO. 100,300. The drawings of Raja and Sam were RO. 40,000 and RO. 50,000, respectively. Interest on drawings amounted to RO. 2,000 for Raja and RO 2,500 for Sam. Prepare Profit and loss Appropriation Account and partners' capital accounts assuming that their capitals are fluctuating