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Question 69 Chapter 6 of +2-A
69. Iqbal and Kapoor are in partnership sharing profits and losses in 3: 2. Kapoor died three months after the date of the last Balance Sheet. According to the Partnership Deed, the legal heir is entitled to the following: a His capital as per the last Balance Sheet.
b Interest on above capital @ 3% p.a. till the date of death.
c His share of profits till the date of death calculated on the basis of last year's profits.
His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period.
The net profits for the last three years, after charging insurance premium, were 20,000; 25,000 and 30,000 respectively. Kapoor's capital as per Balance Sheet was 40,000 and his drawings till the date of death were 5,000.
Draw Kapoor's Capital Account to be rendered to his representatives.
Kapoor’s Capital A/c
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Drawings A/c | 5,000 | By Balance b/d | 40,000 | ||
| To Interest on Drawings A/c | 100 | By Pooja’s Capital A/c WN1 | 300 | ||
| To balance c/d | 38,200 | By Profit and Loss Adjustment A/c | 3,000 | ||
| 43,300 | 43,300 | ||||
Working Notes:
Calculation of Interest on Capita of Kapoor till the date of his death
| Interest | = | Capital | X | Rate | X | Time |
| 4 | 12 |
| = | 40,000 | X | 3 | X | 3 |
| 100 | 12 | ||||
| = | 300 |
Calculation of Share of Profit of Kapoor till date of his death
| profit | = | Last year profit | X | Rate | X | share of profit |
| 4 |
| = | 30,000 | X | 3 | X | 2 |
| 12 | 5 | ||||
| = | 3,000 |
Calculation of Interest on Drawings
| = | Drawing | X | 2% |
| = | 5,000 | X | 2% |
| = | 100 |
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.69 | 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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