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Question
Deceased partner’s executor's account is shown on the ___________ side of the Balance Sheet.
Solution
Deceased partner’s executor's account is shown on the Liabilities side of the Balance Sheet.
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In which ratio General Reserve is distributed on death of a partner?
Rahul, Rohit, and Ramesh are in a business sharing profits and losses in the ratio of 3: 2: 1 respectively. Their balance sheet as on 31st March 2017 was as follows.
| Balance Sheet as on 31st March 2017 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital Account: | Debtors | 1,00,000 | ||
| Rahul | 2,20,000 | Less: R.D.D. | 10,000 | 90,000 |
| Rohit | 2,10,000 | Plant and Machinery | 85,000 | |
| Ramesh | 2,40,000 | Investment | 3,50,000 | |
| Creditors | 80,000 | Motor lorry | 1,00,000 | |
| Bills Payable | 7,000 | Building | 80,000 | |
| General Reserve | 96,000 | Bank | 1,48,000 | |
| 8,53,000 | 8,53,000 | |||
On 1st October 2017, Ramesh died and the Partnership deed provided that
- R.D.D. was maintained at 5% on Debtors
- Plant and Machinery and Investment were valued at ₹ 80,000 and ₹ 4,10,000 respectively.
- Of the creditors, an item of ₹ 6000 was no longer a liability and hence was properly adjusted.
- Profit for 2017-18 was estimated at ₹ 120,000 and Ramesh share in it up to the date of his death was given to him.
- Goodwill of the Firm was valued at two times the average profit of the last five years. Which were
Ramesh share in it was to be given to him2012-13 ₹ 1,80,000 2013-14 ₹ 2,00,000 2014-15 ₹ 2,50,000 2015-16 ₹ 1,50,000 2016-17 ₹ 1,20,000 - Salary 5,000 p.m. was payable to him
- Interest on capital at 5% i.e. was payable and on Drawings ₹ 2000 were charged.
- Drawings made by Ramesh up to September 2017 were ₹ 5,000 p.m.
Prepare Ramesh’s Capital A/c showing the amount payable to his executors
Give Working of Profit and Goodwill
Ramesh’s executors loan A/c ₹ 3,41,000
The Balance Sheet of Sohan, Rohan and Mohan who were sharing profits and Losses in the ratio of 3:2:1 as follows.
| Balance Sheet as on 31st March 2019 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Bank Overdraft | 18,000 | Bank | 48,000 |
| Creditors | 85,000 | Debtors | 30,000 |
| Bills payable | 40,000 | Land and Building | 40,000 |
| Bank Loan | 1,50,000 | Machinery | 80,000 |
| General Reserve | 27,000 | Investments | 40,000 |
| Capital Account: | Computers | 40,000 | |
| Sohan | 20,000 | Stock | 90,000 |
| Rohan | 20,000 | Patents | 12,000 |
| Mohan | 20,000 | ||
| 3,80,000 | 3,80,000 | ||
Mr. Rohan died on 1st October 2019 and the following adjustments were made.
- Goodwill of the firm is valued at ₹ 30,000.
- Land and Building and Machinery were found to be undervalued by 20%.
- Investments are valued at ₹ 60,000
- Stock to be undervalued by ₹ 5000 and a provision of 10% as debtors were required.
- Patents were valueless.
- Mr. Rohan was entitled to share in profits up to the date of death and it was decided that he may be allowed to retain his drawings as his share of profit. Rohan’s drawings till the date of death was ₹ 25000.
Prepare Partners' capital accounts.
The following is the Balance Sheet of Shikha, Divit and Naman, who were partners sharing profits and losses in the ratio of 2 : 2 : 1.
| Balance sheet as on 31st March 2020 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital A/cs: | Investment | 1,40,000 | |||
| Shikha | 80,000 | 2,20,000 | Stock | 48,000 | |
| Divit | 60,000 | Debtors | 81,600 | 80,000 | |
| Naman | 80,000 | Less: R.D.D. | 1,600 | ||
| Creditors | 48,000 | Cash | 12,000 | ||
| Outstanding Salaries | 12,000 | ||||
| 2,80,000 | 2,80,000 | ||||
Naman died on 1st July, 2020 and the following adjustment were made in the books of the firm:
(1) All debtors were considered as good and the Reserve for Doubtful Debts was no longer necessary.
(2) A contingent liability for compensation of ₹ 3,600 was to be provided.
(3) Investment worth ₹ 80,000 were taken over by the executor of Naman and the remaining investments were sold ₹ 60,000.
(4) Stock was revalued at ₹ 60,000.
(5) The goodwill of the firm was valued at ₹ 40,000 and was to be shown in the books.
(6) The deceased partner's share in profit up to the date of his death was to be calculated on the basis of the preceding year's profit which was ₹ 32,000.
Prepare the Profit and Loss Adjustment Account, Capital Accounts of Partners and the Balance Sheet of the new firm after the death of Naman.
Anil, Sunil and Mohit were partners sharing profits and losses in the proportion of their capital Their Balance Sheet as on 31st March, 2019 was as follows:
| Balance Sheet as on 31st March, 2019 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital Accounts: | Land and Building | 80,000 | ||
| Anil | 60,000 | Motor Lorry | 40,000 | |
| Sunil | 40,000 | Debtors | 32,000 | 28,000 |
| Mohit | 20,000 | Less: R.D.D. | (4,000) | |
| Creditors | 50,000 | Furniture | 36,000 | |
| Outstanding Salary | 6,000 | Bank | 28,000 | |
| Reserve fund | 36,000 | |||
| 2,12,000 | 2,12,000 | |||
Mohit died on 1st August. 2019 and the following adjustments were made:
(1) Assets to be revalued as under:
| Land and Building | ₹ 88,000 |
| Motor Lorry | ₹ 36,000 |
| Furniture | ₹ 34,000 |
(2) All debtors were good.
(3) Goodwill of the firm valued at two times the average profit of lost 4 years' profit.
(4) Mohit's share of profit is to be calculated on the basis of average profit of the last three years.
(5) Profit for four years 1st year ₹ 12,000, 2nd year ₹ 24,000, 3rd year ₹ 14,000, 4th year ₹ 22,000.
Prepare:
- Mohit's capital account showing amount payable to his executor.
- Give working note of Mohit's share of goodwill and profit up to the date of his death.
Deceased partner share of profit up to the death is shown on ______ side of Balance Sheet.
Prem, Verma, Sharma, were partners sharing profits and losses in the ratio 2: 1: 1 Their Balance Sheet as on 31st March 2019 is as follows.
| Balance Sheet as on 31st March, 2019 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 20,000 | Premises | 2,40,000 |
| Bank Loan | 90,000 | Debtors | 2,00,000 |
| Bill Payable | 10,000 | Furniture | 60,000 |
| General Reserve | 64,000 | Stock | 1,00,000 |
| Capital Accounts: | Cash | 2,00,000 | |
| Prem | 2,40,000 | ||
| Verma | 2,00,000 | ||
| Sharma | 1,76,000 | ||
| 8,00,000 | 8,00,000 | ||
- Prem died on 30th June 2019 and the following adjustments were made Prem’s share of profit is to be calculated on the average profit of the last two years.
- Prem’s share in the Goodwill of the firm be given him. Goodwill will be valued at three times of the average profits of the last four years. The profits were.
2015-16 ₹ 1,60,000 2016-17 ₹ 1,20,000 2017-18 ₹ 80,000 2018-19 ₹ 40,000 - Premises be valued at ₹ 2,80,000 and R.D.D. of ₹ 8,000 be created on debtors.
- Drawing of Prem up to the date of his death were ₹ 15000 per month.
- Interest on capital is allowed at 10% p.a. and to be charged on drawing at ₹ 4000.
- The amount due to Prem be transferred to his executors loan account.
Prepare: Prem’s Capital Account, Give working of Prem’s share in Goodwill, and Interest on capital.
M, N and O were equal partners on 31st March, 2023. Their Balance Sheet was as follows 31st March, 2023.
| Balance Sheet as on 31st March, 2023 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital Accounts : | Land and Building | 4,80,000 | |
| M | 6,00,000 | Furniture | 3,60,000 |
| N | 2,40,000 | Debtors | 3,60,000 |
| O | 2,40,000 | Stock | 1,20,000 |
| Sundry Creditors | 1,08,000 | Cash | 1,20,000 |
| Bills Payable | 72,000 | ||
| Bank Loan | 1,80,000 | ||
| 14,40,000 | 14,40,000 | ||
M died on 30th June, 2023 and the following adjustments were agreed as:
(1) Furniture was to be adjusted to its market price of ₹ 4,08,000.
(2) Land and Building was to be depreciated by 10%.
(3) Provide R.D.D. @ 5% on Debtors.
(4) The profit up to the date of death of M is to be calculated on the basis of last years profit which was ₹ 2, 16,000.
Prepare Profit and Loss Adjustment A/c, Partners' Capital Accounts A/c and Balance Sheet of the continuing firm.
Shah, Patel, Bhide were partners in a business sharing profits and losses in the ratio of 2 : 1 : I respectively. Their Balance sheet as on 31st March 2022 was as follows:
| Balance Sheet as on 31-03-2022 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital A/c: | Plant & Machinery | 84,000 | |
| Shah | 84,000 | Debtors | 70,000 |
| Patel | 98,000 | Furniture | 42,000 |
| Bhide | 47,600 | Bank | 84,000 |
| Creditors | 25,200 | ||
| Bills Payable | 2,800 | ||
| General Reserve | 22,400 | ||
| 2,80,000 | 2,80,000 | ||
Bhide died on 1st July, 2022:
(1) Plant and Machinery was to be revalued to ₹ 98,000 and R.D.D. is to be created of ₹ 2,800.
(2) The drawings of Bhide up to the date of his death amounted to ₹ 14,000.
(3) Charge interest on drawings ₹ 1,400.
(4) His share of goodwill should be calculated at three year purchase of the profits for the last four years which were I year ₹ 2,30,000, II year ₹ 1,82,000, III year ₹ 98,000, IV ₹ 70,000.
(5) The deceased partner's share of profit up to the date of death to be calculated on the basis of average profit of last two years (III & IV year).
Prepare: Profit and Loss Adjustment Account, Partner's Capital Accounts, Balance Sheet of the continuing firm. Give working note of profit up to the date of death of Bhide and Goodwill.
A, B and C were partners in a business sharing Profits and Losses in the ratio of 2 : 2 : 1 respectively. Their Balance Sheet as on 31st March, 2022 is as under.
| Balance Sheet as on 31st March, 2022 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital A/c: | Land and Building | 89,280 | |||
| A | 64,000 | Investment | 48,000 | ||
| B | 64,000 | Furniture | 25,600 | ||
| C | 32,000 | Debtors | 33,280 | 32,000 | |
| Creditors | 48,000 | Less : R.D.D. | 1,280 | ||
| Bills Payable | 3,200 | Bank | 13,120 | ||
| Bank Loan | 12,800 | Goodwill | 16,000 | ||
| 2,24,000 | 2,24,000 | ||||
On 1st July 2022, C died and the following adjustments were made:
(1) All the debtors were considered as good debtors.
(2) A contingent liability for a compensation of ₹ 1,440 was provided.
(3) Investment were sold out in the market at 10% profit.
(4) Loan were paid off.
5) Land and Building were depreciated by ₹ 1,280 and Furniture by ₹ 1,760.
(6) Goodwill of the firm was valued at ₹ 24,000. It was to be raised in the Books.
(7) C was entitled to get his share in the profit up to the date of his death. Profit for 2022-23 was estimated at ₹ 16,000.
(8) The amount due to C's executors was paid by NEFT.
Prepare Revaluation Account, Partners' Capital Account and Balance Sheet of new firm.
