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Question 59 Chapter 6 of +2-Part-1
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59. (Journal Entries/Executor’s Ale) R, S , T were partners sharing profits and losses in the ratio of 5:3:2 respectively. On 31st December 2017 their balance sheet stood as :
| Liabilities | Rs. | Assets | Rs. |
| Sundry Creditors | 55,000 | Goodwill | 5,000 |
| Reserve fund | 30,000 | Leasehold | 1,00,000 |
| Capital A/c | Patents | 30,000 | |
| R | 1,50,000 | Machinery | 1,50,000 |
| S | 1,25,000 | Stock | 50,000 |
| T | 75,000 | Debtors | 40,000 |
| Cash at bank | 40,000 | ||
| 4,35,000 | 4,35,000 |
T died on 1st May 2018. It was agreed that :
- Goodwill valued at 2 ½ years purchase of last four years profits which were 2015- Rs. 5,000: 2015- Rs. 60,000: 2016- Rs. 80,000 and 2017- Rs. 75,000.
- Machinery be valued at Rs. 1,40,000 ;Patents be valued at Rs. 40,000 ; Leasehold be valued at RS. 1,25,000 on 1st May 218.
- For the purpose of calculating T’s share in the profits of 2018, should be taken to have served on the same sales as in 2017.
- A sum of Rs. 21,000 to be paid immediately to the executors of T and the balance to be paid in four equal half yearly installments together with interest at 10% per annum.
Pass the necessary journal entries to rent the above transactions and T’s executors
The solution of Question 59 Chapter 6 of +2 Part-1: –
| Journal | |||||
| Date | Particulars | L.F. | Debit | Credit | |
| a) | R’s capital A/c | Dr. | 12,500 | ||
| S’s capital A/c | Dr. | 7,500 | |||
| T’s capital A/c | Dr. | 5,000 | |||
| To goodwill A/c | 25,000 | ||||
| (Being old goodwill written off ) | |||||
| b) | R’s capital A/c | Dr. | 21,875 | ||
| S’s capital A/c | Dr. | 13,125 | |||
| To T’s capital A/c | 35,000 | ||||
| (Being goodwill adjusted ) | |||||
| c) | Revaluation A/c | Dr. | 10,000 | ||
| To Machinery A/c | 10,000 | ||||
| (Being machinery revalued ) | |||||
| d) | Patents A/c | Dr. | 10,000 | ||
| Lease hold A/c | Dr. | 25,000 | |||
| To Revaluation A/c | 35,000 | ||||
| (Being assets revalued ) | |||||
| e) | Revaluation A/c | Dr. | 25,000 | ||
| To R’s capital A/c | 12,500 | ||||
| To S’s capital A/c | 7,500 | ||||
| To T’s capital A/c | 5,000 | ||||
| (Being profit on revaluation distributed ) | |||||
| f) | Reserve Fund A/c | Dr. | 30,000 | ||
| To R’s capital A/c | 15,000 | ||||
| To S’s capital A/c | 9,000 | ||||
| To T’s capital A/c | 6,000 | ||||
| (Being reserve distributed ) | |||||
| T’s capital A/c | Dr. | 1,21,000 | |||
| To Bank A/c | 21,000 | ||||
| To executors loan A/c | 1,00,000 | ||||
| (Being cheque paid to T’s Capital) | |||||
T’s Capital A/c | |||||
| Particulars | Amount | Particulars | Amount | ||
| To goodwill A/c | 5,000 | By balance b/d | 75,000 | ||
| To T’s Executor A/c | 1,21,000 | By reserve A/c | 6,000 | ||
| By profit & loss suspense A/c | 5,000 | ||||
| By revaluation A/c | 5,000 | ||||
| By R’s capital A/c | 21,875 | ||||
| By S’s capital A/c | 13,125 | ||||
| 1,26,000 | 1,26,000 | ||||
Working notes :
| Calculation of goodwill | = | 65000+60000+80000+75000 | x | 2.5 |
| 4 | ||||
| = | Rs 1,75,000 |
T’s share of profit for current year
Profit for 2017 ( being same for 2018 )= Rs. 75,000
Profit of frim for 4 months = 75,000 X 4/12 = Rs. 25,000
T’s share in profit = 25,000 X 2/10 = Rs. 5,000
Value of goodwill at 2 year’s purchase = 2 X 7,000 = Rs. 14,000
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| White’s share in goodwill | = | 1 | x | 14,000 |
| 4 | ||||
| = | Rs 3,500 |
Calculation of share of profit of white till date of death
Profit average = Rs. 7,000
This is all about Question 59 Chapter 6 of +2- Part – 1 Usha Publication
Comment if you have any questions.
End of Solution
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Question 01 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1
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Question 19 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Parat – 1
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Question 37 Chapter 5 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)
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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)
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- 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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