Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Arun, Bhim and Nakul are partners in a firm sharing profits in the ratio of 1 : 1 : 3. Their Capital Accounts showed the following balances on 1st April, 2022: Arun ₹2,00,000; Bhim ₹1,50,000; Nakul ₹4,50,000. The firm closes its accounts every year on 31st March. Bhim died on 31st March, 2023. In the event of the death of a partner: (i) interest on capital will be allowed to the deceased partner only, from the first day of the accounting year till the date of death, @10% p.a.; (ii) the deceased partner’s share of goodwill will be calculated on the basis of 2 years’ purchase of the average profit of the last three years — profits for 2021, 2022 and 2023 were ₹90,000, ₹2,00,000 and ₹1,60,000 respectively; (iii) his share of profit till the date of death: the firm’s profit for the year ended 31st March, 2023 was ₹1,60,000 before providing for interest on capital. Bhim’s Executor was paid the sum due in two equal annual instalments with interest @ 10% p.a. Prepare Bhim’s Capital Account as on 31st March, 2023 and his Executor’s Loan Account for the years ending 31st March, 2024 and 31st March, 2025.
BHIM’S CAPITAL ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Bhim’s Executors’ A/c | 2,54,000 | By Balance b/d | 1,50,000 |
| By Arun’s Capital A/c (Goodwill) | 15,000 | ||
| By Nakul’s Capital A/c (Goodwill) | 45,000 | ||
| By Interest on Capital A/c | 15,000 | ||
| By Profit & Loss Suspense A/c | 29,000 | ||
| Total | 2,54,000 | Total | 2,54,000 |
BHIM’S EXECUTORS’ LOAN ACCOUNT
| Date | ₹ | Date | ₹ |
|---|---|---|---|
| 2024 Mar 31 To Bank A/c (1,27,000 + 25,400) | 1,52,400 | 2023 Mar 31 By Bhim’s Capital A/c | 2,54,000 |
| 2024 Mar 31 To Balance c/d | 1,27,000 | 2024 Mar 31 By Interest on Loan A/c (2,54,000 × 10%) | 25,400 |
| Total | 2,79,400 | Total | 2,79,400 |
| 2025 Mar 31 To Bank A/c (1,27,000 + 12,700) | 1,39,700 | 2024 Apr 1 By Balance b/d | 1,27,000 |
| 2025 Mar 31 By Interest on Loan A/c (1,27,000 × 10%) | 12,700 | ||
| Total | 1,39,700 | Total | 1,39,700 |
Working Notes: Average profit = (90,000 + 2,00,000 + 1,60,000) / 3 = ₹1,50,000; Goodwill = 1,50,000 × 2 = ₹3,00,000; Bhim’s share = 3,00,000 × 1/5 = ₹60,000, borne by Arun and Nakul in gaining ratio 1 : 3 (Arun ₹15,000; Nakul ₹45,000). Interest on Capital (full year, since death is at the year-end) = 1,50,000 × 10/100 = ₹15,000. Profit for the year, after deducting Bhim’s interest on capital = 1,60,000 – 15,000 = ₹1,45,000; Bhim’s share = 1,45,000 × 1/5 = ₹29,000.
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.33 - Death of a Partner", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 6 - Death of a Partner.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Chapter 6 Q.33 - Death of a Partner" instantly.