Question 83 Chapter 6 of +2-A

Question 83 Chapter 6 of +2-A

83. X, Y and Z were partners in a firm sharing profits in the ratio of 2: 2: 1. On 31st March 2018, their Balance Sheet was as follows:

Liabilities AmountAssetsAmount
Trade Creditors 1,20,000Cash at Bank1,80,000
Bills Payable 80,000Stock1,40,000
General Reserve 60,000Sundry Debtors80,000
Capital A/cs:   Building3,00,000
X7,00,000 Advance to Y7,00,000
Y7,00,000 Profit and Loss A/c3,20,000
Z60,00014,60,000  
  17,20,000 17,20,000

Y died on 30th June 2018. The Partnership Deed provided for the following on the death of a partner:
i Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2018, 31st March, 2017, 31st March, 2016, 31st March, 2015 and 31st March, 2014 were 3,20,000 Loss; 1,00,000; 1,60,000; 2,20,000 and 4,40,000 respectively.
ii Y’s share of profit or loss from 1st April 2018 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March 2018. You are required to calculate the following:
a Goodwill of the firm and Y’s share of goodwill at the time of his death.
b Y’s share in the profit or loss of the firm till the date of his death.
c Prepare Y’s Capital Account at the time of his death to be presented to his executors.

 

The solution of Question 83 Chapter 6 of +2-A: –

 

Y’s Capital Account
Particular
AmountParticularAmount
Profit & Loss A/c1,28,000Balance b/d7,00,000
Profit & Loss Suspense Share of Loss32,000General Reserve24,000
Advance to Y7,00,000X’s Capital A/c 64,000
   Z’s Capital A/c 32,000
  8,20,000  8,20,000

Working Notes:

Calculation of Share in General Reserve

Reserve=60,000X2
5
     
 =Rs 24,000  

 

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 83 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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