Question 57 Chapter 6 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 57 Chapter 6 of +2- Part

Question 57 Chapter 6 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

57. (Journal Entries/Deceased Partner’s Executor A/c) A, B and Care partners sharing profits and loss in the ratio of 3:2 1 respectively. On 31st December, 2017 their balance sheet was as under :

Liabilities  Rs. Assets  Rs. 
Creditors  19,860 Cash in hand  1,210
General reserve  3,000 Stock 10,750
Capital A/c    Debtors 10,750
A 10,000 Investments  10,430
B 6,000 Buildings  8,000
C 4,000    
       
  42,860   42,860

B died on 28th Feb, 2018 and according to partnership agreement his legal representative is entitled to be paid out as follows:

  1. The capital to his credit at the time of his death and interest up to the time of death @ 6 % p.a.
  2. His appropriate share in general reserve.
  3. His share of profit for the period based on the figure of the profit of the previous year.
  4. Goodwill according to his share of profit to be calculated by taking twice the amount of average profit of the last three years. The profits for three years were 2015 Rs. 7,800, 2016 Rs. 9,000 and 2017 Rs. 9,600.
    Is legal representative was paid off by selling the investments for Rs. 16,020.
    Pass journal entries and write B’s executor’s account

The solution of Question 57 Chapter 6 of +2 Part-1: –

1.) interest in on capital  = 6 x 2 x 6,000
100 12
             
  = Rs 60        
2.) B’s share of the profit  Rs
Previous year profits 9,600
Profit of the firm for 2 months 1,600
B’s share of the profit [(1600X2)/6]= Rs. 533 (app)  
3.) B’s share of the profit on sale of investment : Rs
Realized 16,020
Book value 10,430
Profit 5,590

B’s share of the profit [(5,590 X 2)/6]= Rs. 1863 (app.)

4.) B’s share of goodwill : Rs
Three years profit (7800+9000+9600) 26,400
Average profit (26,400/3) 8,800
Twice the average profit (8,800X 2) 17,600

B’s share of goodwill [(17600 X2 )/6]= 5,867 (app.)

B’s Capital A/c
Particulars
Amount Particulars Amount
To cash A/c   13,460 By B’s capital A/c   6,000
      By general reserve   1,000
      By profit & loss A/c (Int.)   60
      By profit & loss A/c (profit)   533
      By A’s capital A/c   4,400
      By B’s capital A/c   1,467
    13,460     13,460

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 57 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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