Question 65 Chapter 6 of +2-A
65. X and Y are partners. The Partnership Deed provides inter alia: a That the Accounts be balanced on 31st March every year. b That the profits be divided as: X one-half, Y one-third and carried to a Reserve one-sixth. c That in the event of the death of a partner, his Executors be entitled to be paid: i The Capital to his credit till the date of death. ii His proportion of profits till the date of death based on the average profits of the last three completed years. iii By way of Goodwill, his proportion of the total profits for the three preceding years.
| BALANCE SHEET as at 31st March 2019 | ||||
| Liabilities | Amount | Assets | Amount | |
| Capital A/cs: | Sundry Assets | 21,000 | ||
| X | 9,000 | |||
| Y | 6,000 | 15,000 | ||
| Reserve | 3,000 | |||
| Creditors | 3,000 | |||
| 21,000 | 21,000 | |||
Profits for three years were: 2016-17 − 4,200; 2017-18 − 3,900; 2018-19 − 4,500. Y died on 1st August, 2019. Prepare necessary accounts
The solution of Question 65 Chapter 6 of +2-A: –
| Y’s Capital Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Y’s Executor’s A/c | 12,800 | ||||
| By Balance b/d | 6,000 | ||||
| By X’s Capital A/c Reserve | 1,200 | ||||
| By X’s Capital A/c Goodwill | 5,040 | ||||
| By X’s Capital A/c Profit | 560 | ||||
| 12,800 | 12,800 | ||||
Working Notes:
Y’s Share of Reserve
| = | 3,000 | X | 2 | |
| 5 | ||||
| = | Rs 1,200 |
Calculation Y’s Share of Profit
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| Average Profit | = | Profit of last 3 year |
| 3 | ||
| = | 4,200 + 3,900 + 4,500 | |
| 3 | ||
| = | Rs 4,200 |
| Y’s Share of Profit (from April 01, 2019, to August 01, 2019 | = | 4,200 | X | 2 | X | 4 |
| 5 | 12 | |||||
| = | Rs 560 |
Calculation of Y’s Share of Goodwill
Y’s share of Goodwill = Y’s Profit Share in last three year
Profit for last three years = 4,200 + 3,900 + 4,500 = Rs 12,600
| Y’s Share of Goodwill | = | 12,600 | X | 2 |
| 5 | ||||
| = | Rs 5,040 |
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
