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Question 67 Chapter 6 of +2-A
67. Vikas, Gagan and Momita were partners in a firm sharing profits in the ratio of 2 : 2: 1. The firm closes its books on 31st March every year. On 30th September 2014 Momita died. According to the provisions of Partnership Deed the legal representatives of a deceased partner are entitled to the following in the event of his/her death:
a Capital as per the last Balance Sheet.
b Interest on capital at 6% per annum till the date of her death.
c Her share of profit to the date of death calculated on the basis of the average profit of the last four years.
d Her share of goodwill to be determined on the basis of three years' purchase of the average profit of the last four years. The profits for the last four years were:
| Year | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Profit | 30,000 | 50,000 | 40,000 | 60,000 |
The balance in Momita's Capital Account on 31st March 2014 was 60,000 and she had withdrawn 10,000 till the date of her death. Interest on her drawings was 300.
Prepare Momita's Capital Account to be presented to her executors
Momita’s Capital Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Drawings A/c | 10,000 | By Balance b/d | 60,000 | ||
| To Interest on Drawings A/c | 300 | By Interest on Capital A/c | 1,800 | ||
| To Executor’s A/c | 83,000 | By Vikas’s Capital A/c | 13,500 | ||
| By Gagan’s Capital A/c | 13,500 | ||||
| By Profit and Loss Suspense A/c | 4,500 | ||||
| 93,300 | 93,300 | ||||
Working Notes:
Calculation of Interest on Capital
| Interest on Capital | = | 60,000 | X | 6 | X | 6 |
| 100 | 12 | |||||
| = | Rs 1,800 |
| Average Profit | = | Profit of last 4 year |
| 4 | ||
| = | 30,000 + 50,000 + 60,000 + 40,000 | |
| 4 | ||
| = | Rs 45,000 |
Calculation of P’s Share of Profit
Profit for last year = Rs 30,000
| Share of Momita in profit | = | 45,000 | X | 1 | X | 6 |
| 5 | 12 | |||||
| = | Rs 4,500 |
Adjustment of Goodwill
Average Profit = 45,000
Goodwill of the firm = Average Profit X Number of Purchased year
| = | 45,000 | X | 3 |
| = | Rs 1,35,000 |
| Momita’s of Goodwill | = | 1,35,000 | X | 1 |
| 5 | ||||
| = | Rs 27,000 |
| Vikas and Gagan will pay | = | 27,000 | X | 1 |
| 2 | ||||
| = | Rs 13,500 |
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Q.No.67 | Chapter 6 – Retirement/Death of a Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1.
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