Invoice value of the goods lost = 1/10th of the total invoice value of the goods sent = 12,500
Thus total invoice value of the goods sent = 12,500 × 10 = Rs. 1,25,000

The shares are being issued at a premium thus the value of each share issued will be 100 + 25 = Rs. 125
Total value of assets acquired = 7,50,000
Number of shares issued = total value of shares acquired/value per share = 7,50,000/125 = 6,000 shares

Abnormal Loss: It refers to the abnormal loss of stock due to fire, theft or accident. If any abnormal loss is there, goods destroyed will be credited to the Trading Account and will be debited to P&L account after adjusting insurance claim and salvage value because the Trading Account is prepared under normal conditions of the business and has no place for abnormal instances.
Gross profit = sales – cost of goods sold (COGS)
Let COGS = x then
Or 4/3 of x = 2,00,000
Or x = 1,50,000
Or Gross profit = 1/3 of 1,50,000 = 50,000
Closing inventory = opening inventory + purchases + gross profit – sales – goods destroyed =
80,000 + 1,60,000 + 50,000 – 2,00,000 – 30,000 = Rs. 60,000

Under this method goodwill is calculated on the basis of the average of some agreed number of past
years. The average is then multiplied by the agreed number of years.
Goodwill = Average Profits × Number of years of Puchase
Before calculating the average profits the following adjustments should be made in the profits of the firm:
(a) Any abnormal profits shoulld be deducted from the net profits of that year.
(b) Any abnormal loss should be added back to the nat profits of that year.
(c) Non operating incomes eg. income from investments etc should be deducted from the net profits
of that year.
Here average profit of last 5 years will be (85,000 + 90,000 + 70,000 + 1,00,000 + 80,000)/5 = 85,000
Agreed number of years = 3 years
Thus goodwill = 85,000 × 3 = Rs. 2,55,000

The difference is due to wrong placing of salaries A/c. Salaries A/c should have come on Dr. side instead of Cr.

Sales = opening inventory + purchases less return + gross profit – closing in ventory
Let sales be x = 22,000 + 1,10,000 + 20% of x – 25,000
Or x = 1,07,000 + 20% of x
Or x – 20% of x = 1,07,000
80% of x = 1,07,000
x = 1,07,000 × 100/80 = Rs. 1,33,750

The cost of a depreciable asset is made up of:
• The net cost of the asset.
• The cost of site preparation.
• Initial delivery and handling costs.
• Installation costs.
• Professional fees (architects and engineers etc) relating to having the asset in place and ready to
work.
• Other cost incurred to make the asset work, i.e. computer software for a computer.
• Capital improvements made after the initial purchase (not to be confused with repairs and
maintenance).
• In summary, the cost of acquisition includes the purchase cost plus any reasonable costs incurred
in placing the asset into a position where it is ready for use.
The amount debited to machinery account will be
Purchase cost + transportation cost + installation cost = 10,000 + 1,500 + 1,200 = 12,700