Profits of last four years are 12,000, 16,000, 23,000, 27,000 respectively. Calculate goodwill based on average profits of 2 years purchase

None of the above

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Either A or B

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Credited

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Debited

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Solution

The correct option is D
Debited

Total profits = 12,000 + 16,000 + 23,000 + 27,000
= 78,000

Average Profits = 78,000/4
= 19,500

Goodwill = 19,500 * 2
= Rs 39,000

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Profits of last four years are 12,000, 16,000, 23,000, 27,000 respectively. Calculate goodwill based on average profits of 2 years purchase

The correct option is D Debited Total profits = 12,000 + 16,000 + 23,000 + 27,000 = 78,000 Average Profits = 78,000/4 = 19,500 Goodwill = 19,500 * 2 = Rs 39,000

The correct option is D
Debited

Total profits = 12,000 + 16,000 + 23,000 + 27,000
= 78,000

Average Profits = 78,000/4
= 19,500

Goodwill = 19,500 * 2
= Rs 39,000