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

Question 57 Chapter 6 of +2-Part-1

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

• 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

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