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Question
, Q and R were partners in a firm sharing profits in 2 : 2 : 1 ratio. The Partnership Deed provided that on the death of a partner his executors will be entitled to the following:
(a) Interest on Capital @ 12% p.a.
(b) Interest on Drawings @ 18% p.a.
(c) Salary of ₹ 12,000 p.a.
(d) Share in the profit of the firm (up to the date of death) on the basis of previous year's profit.
P died on 31st May, 2018. His capital was ₹ 80,000. He had withdrawn ₹ 15,000 and interest on his drawings was calculated as ₹ 1,200. Profit of the firm for the previous year ended 31st March, 2018 was ₹ 30,000.
Prepare P's Capital Account to be rendered to his executors.
Solution
P’s Capital Account
|
Dr. |
|
Cr. |
|
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
Drawings A/c |
15,000 |
Balance b/d |
80,000 |
|
Interest on Drawings A/c |
1,200 |
Interest on Capital A/c |
1,600 |
|
P’s Executor’s A/c |
69,400 |
Salary (12,000 × 2/12) |
2,000 |
|
|
|
Profit and Loss Suspense A/c |
2,000 |
|
|
85,600 |
|
85,600 |
Working Notes:
WN 1 Calculation of Interest on Capital
P’s Capital Balance = Rs 80,000
Interest on Capital (for 2 months) =`80,000 xx 12/100 xx 2/12 = "Rs" 1,600`
WN 2 Calculation of P’s Share of Profit
Profit for last year = Rs 30,000
∴ P’s Share of Profit (for 2 Months)
=`30,000 xx 2/5 xx 2/12 = "Rs" 2,000`
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Assets | Amount (₹) |
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Sundry Creditors |
12,600 |
Bank | 4,100 | ||
| Provident Fund |
3,000 |
Debtors |
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|
|
| General Reserve |
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1,000 |
29,000 |
|
| Capital A/cs: |
|
|
|||
|
Amit |
40,000 | Stock | 25,000 | ||
|
Balan |
36,500 | Investments | 10,000 | ||
|
Chander |
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|
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|
1,21,100 |
1,21,100 |
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
42,000 |
Land and Building | 1,24,000 | ||
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|
30,000 |
|
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|
| Less: Provision |
6,000 |
74,000 |
|||
|
|
|
Cash |
32,000 |
||
|
3,62,000 |
3,62,000 |
||||
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|
Liabilities |
₹ |
Assets |
₹ |
||
|
Creditors |
11,000 |
Building |
20,000 |
||
|
Reserves |
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||
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|
Capital A/cs: |
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| A |
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| C |
15,000 |
65,000 |
|||
|
87,000 |
87,000 |
||||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
| Sundry Creditors | 13,800 | Furniture | 16,000 | ||
| General Reserve | 23,400 | Land and Building | 56,000 | ||
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| Bhavya's Capital | 50,000 | Trade Receivables | 18,500 | ||
| Sakshi's Capital | 40,000 | Cash in Hand | 26,700 | ||
| 1,47,200 | 1,47,200 | ||||
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BALANCE SHEET OF A AND B
as on 1st April, 2019
| Liabilities | Amount (₹) |
Assets |
Amount (₹) |
|
| Capital A/cs: | Land ad Building | 2,90,000 | ||
| A | 3,00,000 | Furniture | 80,000 | |
| B | 2,00,000 | 5,00,000 | Stock | 2,40,000 |
| Reserve | 1,50,000 | Debtors | 1,50,000 | |
| Creditors | 2,00,000 | Bank | 60,000 | |
| Cash | 30,000 | |||
| 8,50,000 | 8,50,000 | |||
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