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Question 74 Chapter 6 of +2-A
74. Babita, Chetan and David are partners in a firm sharing profits in the ratio of 2 : 1 : 1 respectively. Firm closes its accounts on 31st March every year. Chetan died on 30th September, 2012. There was a balance of 1,25,000 in Chetan's Capital Account in the beginning of the year. In the event of death of any partner, the Partnership Deed provides for the following:
a Interest on capital will be calculated at the rate of 6% p.a.
b The executor of deceased partner shall be paid 24,000 for his share of goodwill.
c His share of Reserve Fund of 12,000, shall be paid to his executor.
d His share of profit till the date of death will be calculated on the basis of sales. It is also specified that the sales during the year 2011-12 were 4,00,000. The sales from 1st April, 2012 to 30th September, 2012 were 1,20,000. The profit of the firm for the year ending 31st March, 2012 was 2,00,000. Prepare Chetan's Capital Account to be presented to his executor.
A’s Capital Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Chetan’s Executor’s A/c | 1,79,750 | By Capital | 1,25,000 | ||
| By Interest on Capital for 6 months | 3,750 | ||||
| By Babita’s Share Capital A/c* | 16,000 | ||||
| By David’s Share Capital A/c* | 8,000 | ||||
| By Share of Reserve | 12,000 | ||||
| By P & L Suspense A/c** | 15,000 | ||||
| 1,79,750 | 1,79,750 | ||||
Working Notes:
Calculation of Interest on Capital
Chetan’s Share of goodwill = Rs 24,000
| Babita’s Share of contribution | = | 24,000 | X | 2 |
| 3 | ||||
| = | Rs 16,000 |
| David’s Share of contribution | = | 24,000 | X | 1 |
| 3 | ||||
| = | Rs 8,000 |
**Sales in the year 2011-12 = 4,00,000
Profit for year 2011-12 = 2,00,000 = 50% of Sales
Therefore, Profit for the Period Apr 01 to 30 th Sep = 50% of Sales of the same period
Share of Profit to be divided = 50% of Rs 1,20,000 = Rs 60,000
Chetan’s Share of Profit = 1/4 th of Rs 60,000 = Rs 15,000
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.74 | 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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