Question 74 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 74 Chapter 6 of +2-A

Question 74 Chapter 6 of +2-A

74. Babita, Chetan and David are partners in a firm sharing profits in the ratio of 2 : 1 : 1 respectively. Firm closes its accounts on 31st March every year. Chetan died on 30th September, 2012. There was a balance of 1,25,000 in Chetan’s Capital Account in the beginning of the year. In the event of death of any partner, the Partnership Deed provides for the following:
a Interest on capital will be calculated at the rate of 6% p.a.
b The executor of deceased partner shall be paid 24,000 for his share of goodwill.
c His share of Reserve Fund of 12,000, shall be paid to his executor.
d His share of profit till the date of death will be calculated on the basis of sales. It is also specified that the sales during the year 2011-12 were 4,00,000. The sales from 1st April, 2012 to 30th September, 2012 were 1,20,000. The profit of the firm for the year ending 31st March, 2012 was 2,00,000. Prepare Chetan’s Capital Account to be presented to his executor.

 

 

The solution of Question 74 Chapter 6 of +2-A: –

 

A’s Capital Account
Particular
Amount Particular Amount
To Chetan’s Executor’s A/c 1,79,750 By Capital 1,25,000
    By Interest on Capital for 6 months 3,750
    By Babita’s Share Capital A/c* 16,000
      By David’s Share Capital A/c*   8,000
      By Share of Reserve   12,000
      By P & L Suspense A/c**   15,000
    1,79,750     1,79,750

 

 

Working Notes:

Calculation of Interest on Capital

Chetan’s Share of goodwill = Rs 24,000

Babita’s Share of contribution = 24,000 X 2
3
         
  = Rs 16,000    

 

David’s Share of contribution = 24,000 X 1
3
         
  = Rs 8,000    

 

**Sales in the year 2011-12 = 4,00,000
Profit for year 2011-12 = 2,00,000 = 50% of Sales
Therefore, Profit for the Period Apr 01 to 30 th Sep = 50% of Sales of the same period
Share of Profit to be divided = 50% of Rs 1,20,000 = Rs 60,000
Chetan’s Share of Profit = 1/4 th of Rs 60,000 = Rs 15,000

 

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 74 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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