Question 75 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 75 Chapter 6 of +2-A

Question 75 Chapter 6 of +2-A

75. Sunny, Honey and Rupesh were partners in a firm. On 31st March 2014, their Balance Sheet was as follows:

Liabilities   Amount  Assets Amount
Creditors   10,000 Plant and Machinery 40,000
General Reserve   30,000 Furniture 15,000
Capital A/cs:     Investments 20,000
Sunny 30,000   Debtors 20,000
Honey 30,000   Stock 20,000
Rupesh 20,000 80,000 Cash  25,000
    1,20,000   1,20,000

Honey died on 31st December, 2014. The Partnership Deed provided that the representatives of the deceased partner shall be entitled to:
a Balance in the Capital Account of the deceased partner.
b Interest on Capital @ 6% per annum up to the date of his death.
c His share in the undistributed profits or losses as per the Balance Sheet.
d His share in the profits of the firm till the date of his death, calculated on the basis of the rate of net profit on sales of the previous year.
The rate of net profit on sales of the previous year was 20%. Sales of the firm during the year till 31st December 2014 was 6,00,000. Prepare Honey’s Capital Account to be presented to his executors.

 

The solution of Question 75 Chapter 6 of +2-A: –

 

Honey’s Capital A/c
Particular
Amount Particular Amount
To Executor’s A/c 81,350 By Balance b/d 30,000
    By Interest on Capital A/c 1,350
    By General Reserve 10,000
      By Profit and Loss Suspense A/c   40,000
    81,350     81,350

 

Working Notes:

Calculation of Interest on Honey’s Capital

Interest on capital = 30,000 X 6 X 9
100 12
             
  = Rs 1,350        

 

Calculation of Honey’s share in profits

Profit = Sale X Rate of Profit
100
  = 6,00,000 X 20
100
         
  = Rs 1,20,000    

 

Honey’s share in profits = 1,20,000 X 1
3
         
  = Rs 40,000    


Calculation of Honey’s Share in General Reserve

Honey’s share in profits = 30,000 X 1
3
         
  = Rs 10,000    

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 75 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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