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Question
Harihar, Hemang and Harit were partners with fixed capitals of ₹3,00,000, ₹ 2,00,000 & ₹ 1,00,000 respectively. They shared profits in the ratio of their fixed capitals. Harit died on 31st May 2020, whereas the firm closes its books of accounts on 31st March every year. According to their partnership deed, Harit’s representatives would be entitled to get a share in the interim profits of the firm on the basis of sales. Sales and profit for the year 2019-20 amounted to ₹8,00,000 and ₹2,40,000 respectively and sales from 1st April 2020 to 31st May 2020 amounted to ₹ 1,50,000. The rate of profit to sales remained constant during these two years. You are required to:
- Calculate Harit’s share in profit.
- Pass journal entries to record Harit’s share in profit.
Solution
i.
Ratio of Profit to sales = `(2,40,000)/(8,00,000) xx 100` = 30%
Profit upto the date of death = `(1,50,000) xx 30%`
= ₹ 45,000
Profit sharing Ratio = 3:2:1
Harit’s Share of Profit = `45,000 xx 1/6`
= ₹ 7,500
ii.
| Journal | ||||
| Date | Particulars | L.F. | Dr. Amount (₹) |
Cr. Amount (₹) |
| Profit & Loss Suspense A/c | 7,500 | |||
|
To Harit’s Current A/c (Being Harit’s share in profit |
7,500 | |||
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Trade Payables Bank Loan Capitals Dev 77,000 Swati 37,000 Sanskar 46,000 |
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Balance Sheet of Singh, Jain, Sharma and Gupta as at 1.4.2016 |
||||
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Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
|
|
Capitals: |
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Fixed Assets |
1,60,000 |
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|
Singh |
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Current Assets |
90,000 |
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Jain |
40,000 |
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|
Sharma |
40,000 |
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Gupta |
40,000 |
1,70,000 |
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|
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|
|
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|
|
Sundry Creditors |
45,000 |
|
|
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|
Workmen Compensation Reserve |
35,000 |
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|
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|
2,50,000 |
|
2,50,000 |
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||
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| B’s Capital A/c ...Dr. | 1,80,000 | |||
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