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:
- The capital to his credit at the time of his death and interest up to the time of death @ 6 % p.a.
- His appropriate share in general reserve.
- His share of profit for the period based on the figure of the profit of the previous year.
- 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 Content covered in this article:
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 | 16,020 |
| 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) | 16,020 |
| Average profit (26,400/3) | 10,430 |
| Twice the average profit (8,800X 2) | 5,590 |
B’s share of goodwill [(17600 X2 )/6]= (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
