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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Madhav, Raghav and Purav were partners in a firm sharing profits and losses in the ratio of 3 : 1 : 1. Their Balance Sheet as at 31st March, 2023 showed Creditors ₹1,00,000, General Reserve ₹50,000, Capitals – Madhav ₹60,000, Raghav ₹1,00,000, Purav ₹40,000; Bank ₹20,000, Stock ₹1,10,000, Investment ₹70,000, Furniture ₹35,000, Building ₹1,15,000. Purav died on 30th September, 2023. According to the Partnership Deed, his legal representatives are entitled to: (i) balance in his Capital Account; (ii) share of profit up to the date of death, calculated on the basis of last year’s profit; (iii) share of goodwill calculated on the basis of three years’ purchase of the average profits of the last four years; (iv) interest on capital @ 12% p.a. Purav’s share of profit was ₹3,000, and the average profit of the last four years was ₹50,000. Purav’s drawings up to the date of death were ₹10,000. Prepare Purav’s Capital Account to be rendered to his legal representatives. (CBSE 2024)
PURAV’S CAPITAL ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Drawings A/c | 10,000 | By Balance b/d | 40,000 |
| To Purav’s Executors’ A/c | 75,400 | By General Reserve A/c | 10,000 |
| By Profit & Loss Suspense A/c | 3,000 | ||
| By Madhav’s Capital A/c (Goodwill) | 22,500 | ||
| By Raghav’s Capital A/c (Goodwill) | 7,500 | ||
| By Interest on Capital A/c | 2,400 | ||
| Total | 85,400 | Total | 85,400 |
Working Notes: Goodwill = average profit of last four years (₹50,000) × 3 = ₹1,50,000; Purav’s share = 1,50,000 × 1/5 = ₹30,000, compensated by Madhav and Raghav in gaining ratio 3 : 1 (Madhav ₹22,500; Raghav ₹7,500). Interest on Capital for 6 months = 40,000 × 12/100 × 6/12 = ₹2,400. General Reserve share = 50,000 × 1/5 = ₹10,000.
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 "T.S. Grewal Class 12 Chapter 6 Q.31 - Death of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 6 - Death of a Partner.
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