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 Content covered in this article:
The solution of Question 55 Chapter 6 of +2 Part-1: –
|To drawings||1,000||By interest on capital||500|
|To interest on drawings||30||By salary||800|
|To B’s capital A/c||6,270||By 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|
|B’s Capital A/c|
|To B’s executors A/c||16,270||By balance b/d||10,000|
|By B’s current A/c||6,270|
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
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement