Question 57 Chapter 6 of +2- Part

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 19,860Cash in hand 1,210
General reserve 3,000Stock10,750
Capital A/c  Debtors10,750
A10,000Investments 10,430
B6,000Buildings 8,000
C4,000  
    
 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 =6x2x6,000
10012
       
 =Rs 60    
2.) B’s share of the profit Rs
Previous year profits16,020
Profit of the firm for 2 months1,600
B’s share of the profit [(1600X2)/6]= Rs. 533 (app) 
3.) B’s share of the profit on sale of investment :Rs
Realized16,020
Book value10,430
Profit5,590

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
AmountParticularsAmount
To cash A/c 13,460By 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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