Question 68 Chapter 6 of +2-A
68. On 31st March 2014, the Balance Sheet of Pooja, Qureshi and Ross, who were partners in a firm was as under:
| Liabilities | Amount | Assets | Amount | |
| Sundry Creditors | 2,50,000 | Building | 2,60,000 | |
| Reserve Fund | 2,00,000 | Investment | 1,10,000 | |
| Capital A/c | Qureshi’s Loan | 1,00,000 | ||
| Pooja | 1,50,000 | Debtors | 1,50,000 | |
| Qireahi | 1,00,000 | Stock | 1,20,000 | |
| Ross | 1,00,000 | 3,50,000 | Cash | 60,000 |
| 8,00,000 | 8,00,000 |
Qureshi died on 1st July 2014. The profit-sharing ratio of the partners was 2 : 1: 1. On the death of a partner, the partnership deed provided for the following:
i His share in the profits of the firm till the date of his death will be calculated on the basis of average profits of the last three completed years.
ii Goodwill of the firm will be calculated on the basis of the total profit for the last two years.
iii Interest on loan given by the firm to a partner will be charged at the rate of 6% p.a. or 4,000, whichever is more.
iv Profits for the last three years were 45,000; 48,000 and 33,000.
Prepare Qureshi’s Capital Account to be rendered to his executors
The solution of Question 68 Chapter 6 of +2-A: –
| Qureshi’s Capital A/c |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Drawings A/c | 1,04,000 | By Balance b/d | 1,00,000 | ||
| To Executor’s A/c | 68,875 | By Pooja’s Capital A/c WN1 | 13,500 | ||
| By Ross’s Capital A/c WN1 | 6,750 | ||||
| By Profit & Loss Suspense A/c WN2 | 2,625 | ||||
| By Reserve Fund A/c 2,00,000 × 1/4 | 50,000 | ||||
| 1,72,875 | 1,72,875 | ||||
Working Notes:
Calculation of Qureshi’s Share of Goodwill
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Goodwill = 48,000 + 33,000 = 81,000
Qureshi’s Share of Goodwill = 81,000 × 1/4 = 20,250
Gaining Ratio = Pooja : Ross = 2 : 1
| Amount debited to Pooja’s Capital A/c | = | 20,250 | X | 2 |
| 3 | ||||
| = | Rs 13,500 |
| Amount debited to Ross’s Capital A/c | = | 20,250 | X | 1 |
| 3 | ||||
| = | Rs 6,750 |
Calculation of Qureshi’’s Share of Loss till the date of his death
Average Profit of the last three years = 45,000 + 48,000 + 33,000/3 = 42,000
Qureshi’s share of loss till the date of death = Previous year’s loss × Qureshi’s Share of Loss × Months till the date of his death/12
| = | 42,000 | X | 1 | X | 3 | |
| 4 | 12 | |||||
| = | Rs 2,625 |
Calculation of Amount due on account of Loan given to Qureshi
Loan given to Qureshi by a firm = 1,00,000
| Amount of interest till 1st July, 2014 | = | 1,00,000 | X | 6 | X | 3 |
| 100 | 12 | |||||
| = | Rs 1,500 |
Adjustment of Goodwill
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| Total Amount due to firm on 1st July | = | Loan amount | + | Amount of Interest |
| = | 1,00,000 | + | 4,000 | |
| = | Rs 1,04,000 |
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
