Question 56 Chapter 6 of +2-Part-1
56. (Journal Entries/Amount due to executors of deceased Partner) Following is the balance sheet of Black, Brown, and White as of 31st December 2018
| Liabilities | Rs. | Assets | Rs. |
| Capital A/c | Plant & Machinery | 10,000 | |
| Black | 10,000 | Stock | 4,000 |
| Brown | 5,000 | Sundry Debtors | 6,000 |
| White | 5,000 | Cash in hand | 200 |
| Sundry Creditors | 2,000 | Cash at bank | 5,000 |
| Reserve fund | 3,200 | ||
| 25,200 | 25,200 |
White died on 31st March 2019. Under the terms of the partnership deed, the Executors of a deceased partner wore entitled:
- the amount standing to the credit of the partner’s capital account,
- share of goodwill on the basis of twice the average of the past three year’s profit; and
- share of profit from the closing of the last financial year to the death on the basis of the last years profits.
Profits for 2016, 2017, and 2018 were respectively. Rs. 6,000, Rs. 8,000 and Rs. 7,000.Profits were shared in the ratio of capitals.
Pass the necessary journal entries and show the amount due to the executors of White.
The solution of Question 56 Chapter 6 of +2 Part-1: –
| Journal |
|||||
| Date | Particulars |
L.F. | Debit | Credit | |
| a) | Reserve fund A/c | Dr. | 3,200 | ||
| To Black’s capital A/c | 1,600 | ||||
| To Brown’s capital A/c | 800 | ||||
| To White’s capital A/c | 800 | ||||
| (Being reserve fund transferred to the capital A/c in old profit sharing ratio ) | |||||
| b) | Black’s capital A/c | Dr. | 2,333 | ||
| Brown’s capital A/c | Dr. | 1,167 | |||
| To White’s capital A/c | 3,500 | ||||
| (Being goodwill A/c raised with the share of deceased partner ) | |||||
| c) | Profit & loss suspense A/c | Dr. | 438 | ||
| To White’s capital A/c | 438 | ||||
| (Being white’s share of profit to the date of death ) | |||||
| d) | White’s capital A/c | Dr. | 9,738 | ||
| To Executor’s of White loan A/c | 9,738 | ||||
| (Being amount due to white transferred to executors A/c ) | |||||
| White’s Capital A/c |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To executor’s loan A/c | 9,738 | By balance b/d | 5,000 | ||
| By reserve fund | 800 | ||||
| By goodwill A/c | 3,500 | ||||
| By profit & loss A/c | 438 | ||||
| 9,738 | 9,738 | ||||
WORKING NOTES :
Valuation of goodwill
| Year | Profit |
| 2016 | 6,000 |
| 2017 | 8,000 |
| 2018 | 7,000 |
| Total | 21,000 |
| Average profit | = | 21,000 |
| 3 | ||
| = | 7,000 |
Value of goodwill at 2 year’s purchase = 2 X 7,000 = Rs. 14,000
| White’s share in goodwill | = | 1 | x | 14,000 |
| 3 | ||||
| = | Rs 3,500 |
Calculation of share of profit of white till date of death
Profit of 2018 = Rs. 7,000
| Profit for 3 months | = | 3 | x | 7,000 |
| 12 | ||||
| = | Rs 1,750 |
| White’s share of profit | = | 1 | x | 1,750 |
| 4 | ||||
| = | Rs 438 |
Comment if you have any questions.
End of Solution
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Question 19 Chapter 6 of +2 Part-1 – USHA Publication 12 Class Part – 1
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Question 29 Chapter 6 of +2 Part- 1 – USHA Publication 12 Class
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Question 39 Chapter 6 of +2 Part- 1 – USHA Publication
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Question 52 Chapter 6 of +2 Part-1 – USHA Publication 12 Class Part – 1
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Chapter-Wise Solution of Usha Publication Accountancy – Part 1 Class 12 – Session 2024-25 as per the PSEB curriculum
Check out Solutions to all questions of the every chapter shown as under. The Solution of Accountancy – Part 1 Class 12 – Session 2024-25 is provided as per the new book published by Usha Publication.
Chapter No. 1 – Accounting Not-for-Profit Organisations (Deleted from the Syllabus)
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)
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Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 1 Class 12 by Unimax Publication
- Chapter No. 1 – Accounts of Non-Profit Organisations (Deleted from the Syllabus)
- Chapter No. 2 – Partnership Accounts – I (Basic Concepts)
- Chapter No. 3 – Partnership Accounts – II (Goodwill)
- Chapter No. 4 – Partnership Accounts – III (Change in Profit Sharing Ratio among Existing Partners)
- 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)
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1. Accountancy – Part 2 Class 12 – Session 2024-25 By Usha Publication
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