Question 55 Chapter 6 of +2- Part

Question 55 Chapter 6 of +2-Part-1

55. (Current A/c of Deceased Partner) A, B and C are equal partners of a trading firm The capital of the firm is Rs. 30,000 held equally by the partners.
The firm has taken out a policy of life insurance for Rs. 9,000 on the lives of the partners; payable on the first death.
Under the partnership deed :
(a) A and B were entitled to be credited at the theme of each year with partnership salaries of Rs. 900 and Rs. 800 respectively
(b) In the event of the death of a partner, goodwill was to be valued at one years purchase of the average profit of the three years preceding the death.
(c) Partners were to be charged 5% interest on their drawings and were to be allowed 5%interest on their capitals.
B died on 1st January, 2016. His drawings during 2015 amounted to Rs. 1,000 and interest theorem Rs. 30. His share of profit up to the date of death is to be calculated on the basis of last year’s profit.
The profits for the three years preceding the death were 2013 profit Rs. 10,000: 2014 loss Rs. 1,600: 2015 profit Rs. 4,000.
Prepare B’s current and capital accounts as they would appear in the books of the firm after receipt of the assurance policy money.

The solution of Question 55 Chapter 6 of +2 Part-1: –

Current account
Particulars
AmountParticularsAmount
To drawings 1,000By interest on capital 500
To interest on drawings 30By salary 800
To B’s capital A/c 6,270By profit & loss A/c 1,500
   By joint life policy 3,000
   By A’s capital A/c 750
   By C’s capital A/c 750
  7,300  7,300
B’s Capital A/c
Particulars
AmountParticularsAmount
To B’s executors A/c 16,270By balance b/d 10,000
   By B’s current A/c 6,270
  16,270  16,270

WORKING NOTES :

Calculation of goodwill :
Profits of 3 years = 10600-1600+4500 = Rs 13,550
One year’s purchase of average profits = 13,500/3 = Rs 4,500
B’s 1/3rd share = 4,500/3 = Rs 1,500
Comment if you have any questions.

Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 55 Chapter 6 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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