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Question 71 Chapter 6 of +2-A
71. Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2013, their Balance Sheet was as under:
| Liabilities | Amount | Assets | Amount | |
| Capital A/cs: | Buildings | 2,00,000 | ||
| Virad | 3,00,000 | Machinery | 3,00,000 | |
| Vishad | 2,50,000 | Patents | 1,10,000 | |
| Roma | 1,50,000 | 7,00,000 | Stock | 1,00,000 |
| Reserve Fund | 60,000 | Debtors | 80,000 | |
| Creditors | 1,10,000 | Cash | 80,000 | |
| 8,70,000 | 8,70,000 |
Virat died on 1st October 2013. It was agreed between his executors and the remaining partners that:
i Goodwill of the firm be valued at 212 years purchase of average profits for the last three years. The average profits were 1,50,000.
ii Interest on capital be provided at 10% p.a. iii Profits for 2013-14 be taken as having accrued at the same rate as that of the previous y
A’s Capital Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Executor’s A/c | 5,70,000 | By Balance b/d | 3,00,000 | ||
| By Vishad’s Capital A/c | 1,12,500 | ||||
| By Roma’s Capital A/c | 75,000 | ||||
| By Profit and Loss Suspense A/c | 37,500 | ||||
| By Reserve Fund | 30,000 | ||||
| By Interest on Capital | 15,000 | ||||
| 5,70,000 | 5,70,000 | ||||
Working Notes:
Calculation of Gaining Ratio of Vishad and Roma:
Old Ratio Virad, Vishad and Roma = 5:3:2
New Ratio Vishad and Roma = 3:2
Gaining Ratio = New Ratio – Old Ratio
| Vishad’s Share | = | 3 | - | 3 |
| 5 | 10 | |||
| = | 3 | |||
| 10 |
| Roma ’s Share | = | 2 | - | 2 |
| 5 | 10 | |||
| = | 2 | |||
| 10 |
Hence, gaining ratio is 3 : 2
Calculation of Virad’s Share of Goodwill:
Goodwill of the firm = Average Profit X Number of year’s purchased
| Goodwill of Firm | = | 1,50,000 | X | 2 | 1 |
| 2 | |||||
| = | Rs3,75,000 |
| Share of goodwill of Virad | = | 3,75,000 | X | 5 |
| 10 | ||||
| = | Rs 1,87,500 |
| Vishad will give | = | 1,87,500 | X | 3 |
| 5 | ||||
| = | Rs 1,12,500 |
| Roma will give | = | 1,87,500 | X | 2 |
| 5 | ||||
| = | Rs 75,000 |
Calculation of Profit share of Virad:
Profit for the year = Rs 1,50,000
| Virad’s Share of Profit | = | 1,50,000 | X | 5 | X | 6 |
| 10 | 12 | |||||
| = | Rs 37,500 |
Calculation of Interest on Virad ‘s Capital:
| Interest on capital | = | 3,00,000 | X | 10 | X | 6 |
| 100 | 12 | |||||
| = | Rs 15,000 |
Virad’s share of Reserve fund:
| Share of Reseve Fund | = | 60,000 | X | 5 |
| 10 | ||||
| = | Rs 30,000 |
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.71 | 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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