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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2025, their Balance Sheet showed Trade Creditors ₹1,20,000, Bills Payable ₹80,000, General Reserve ₹60,000, Capitals – X ₹7,00,000, Y ₹7,00,000, Z ₹60,000; Cash at Bank ₹1,80,000, Stock ₹1,40,000, Sundry Debtors ₹80,000, Building ₹3,00,000, Advance to Y ₹7,00,000, Profit and Loss A/c (Dr., i.e. accumulated loss) ₹3,20,000. Y died on 30th June, 2025. The Partnership Deed provided that: (i) goodwill be calculated on the basis of 2 times the average profit of the past 5 years — profits/(loss) for the years ended 31st March 2025, 2024, 2023, 2022 and 2021 were ₹3,20,000 (Loss), ₹1,00,000, ₹1,60,000, ₹2,20,000 and ₹4,40,000 respectively; (ii) Y’s share of profit or loss from 1st April, 2025 till death be calculated on the basis of the result for the year ended 31st March, 2025. Calculate (a) goodwill and Y’s share of it, (b) Y’s share of profit/loss till death, and (c) prepare Y’s Capital Account to be presented to his executors.
Y’S CAPITAL ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Profit & Loss A/c | 1,28,000 | By Balance b/d | 7,00,000 |
| To Profit & Loss Suspense A/c (Share of Loss) | 32,000 | By General Reserve A/c | 24,000 |
| To Advance to Y A/c | 7,00,000 | By X’s Capital A/c (Goodwill) | 64,000 |
| By Z’s Capital A/c (Goodwill) | 32,000 | ||
| By Y’s Executors’ A/c (recoverable, WN below) | 40,000 | ||
| Total | 8,60,000 | Total | 8,60,000 |
Working Notes: Average profit = (1,00,000 + 1,60,000 + 2,20,000 + 4,40,000 – 3,20,000) / 5 = ₹1,20,000; Goodwill = 1,20,000 × 2 = ₹2,40,000; Y’s share = 2,40,000 × 2/5 = ₹96,000, contributed by X and Z in 2 : 1 (X ₹64,000; Z ₹32,000). Y’s share of the accumulated Profit & Loss A/c debit balance (old ratio) = 3,20,000 × 2/5 = ₹1,28,000. Y’s share of loss for 3 months (1st April–30th June, 2025, based on 2024-25 result) = 3,20,000 × 2/5 × 3/12 = ₹32,000. Since the ₹7,00,000 “Advance to Y” already outstanding exceeds Y’s net entitlement by ₹40,000, that amount is recoverable from Y’s executors rather than payable to them.
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.32 - 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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