Question 69 Chapter 6 of +2-A
69. Iqbal and Kapoor are in partnership sharing profits and losses in 3: 2. Kapoor died three months after the date of the last Balance Sheet. According to the Partnership Deed, the legal heir is entitled to the following: a His capital as per the last Balance Sheet.
b Interest on above capital @ 3% p.a. till the date of death.
c His share of profits till the date of death calculated on the basis of last year’s profits.
His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period.
The net profits for the last three years, after charging insurance premium, were 20,000; 25,000 and 30,000 respectively. Kapoor’s capital as per Balance Sheet was 40,000 and his drawings till the date of death were 5,000.
Draw Kapoor’s Capital Account to be rendered to his representatives.
The solution of Question 69 Chapter 6 of +2-A: –
| Kapoor’s Capital A/c |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Drawings A/c | 5,000 | By Balance b/d | 40,000 | ||
| To Interest on Drawings A/c | 100 | By Pooja’s Capital A/c WN1 | 300 | ||
| To balance c/d | 38,200 | By Profit and Loss Adjustment A/c | 3,000 | ||
| 43,300 | 43,300 | ||||
Working Notes:
Calculation of Interest on Capita of Kapoor till the date of his death
| Interest | = | Capital | X | Rate | X | Time |
| 4 | 12 |
| = | 40,000 | X | 3 | X | 3 | |
| 100 | 12 | |||||
| = | 300 |
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Calculation of Share of Profit of Kapoor till date of his death
| profit | = | Last year profit | X | Rate | X | share of profit |
| 4 |
| = | 30,000 | X | 3 | X | 2 | |
| 12 | 5 | |||||
| = | 3,000 |
Calculation of Interest on Drawings
| = | Drawing | X | 2% | |
| = | 5,000 | X | 2% | |
| = | 100 |
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
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