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 AssetsAmount
Creditors 10,000Plant and Machinery40,000
General Reserve 30,000Furniture15,000
Capital A/cs:  Investments20,000
Sunny30,000 Debtors20,000
Honey30,000 Stock20,000
Rupesh20,00080,000Cash 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
AmountParticularAmount
To Executor’s A/c81,350By Balance b/d30,000
  By Interest on Capital A/c1,350
  By General Reserve10,000
   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=30,000X6X9
10012
       
 =Rs 1,350    

 

Calculation of Honey’s share in profits

Profit=SaleXRate of Profit
100
 =6,00,000X20
100
     
 =Rs 1,20,000  

 

Honey’s share in profits=1,20,000X1
3
     
 =Rs 40,000  


Calculation of Honey’s Share in General Reserve

Honey’s share in profits=30,000X1
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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

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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