Question 68 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 68 Chapter 6 of +2-A

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

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

 

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)

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

 

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2 Book 1 min - Question 68 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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