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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. - Book Keeping and Accountancy

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Question

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

  1. R.D.D. was maintained at 5% on Debtors
  2. Plant and Machinery and Investment were valued at ₹ 80,000 and ₹ 4,10,000 respectively.
  3. Of the creditors, an item of ₹ 6000 was no longer a liability and hence was properly adjusted.
  4. 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.
  5. Goodwill of the Firm was valued at two times the average profit of the last five years. Which were 
    2012-13 ₹ 1,80,000
    2013-14 ₹ 2,00,000
    2014-15 ₹ 2,50,000
    2015-16 ₹ 1,50,000
    2016-17 ₹ 1,20,000
    Ramesh share in it was to be given to him
  6. Salary 5,000 p.m. was payable to him
  7. Interest on capital at 5% i.e. was payable and on Drawings ₹ 2000 were charged.
  8. 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

Ledger

Solution

In the books of the Partnership Firm

Dr. Ramesh’s Capital Account Cr.
Particulars Amount (₹) Particulars Amount (₹)
To Drawings A/c 30,000 By Balance b/d 2,40,000
To Interest on Drawings A/c 2,000 By Goodwill A/c 60,000
To Executor’s Loan A/c 3,41,000 By Salary A/c 30,000
    By Interest on Capital A/c 6,000
    By Profit and Loss Adjustment A/c – Profit 11,000
    By Profit and Loss Suspense A/c 10,000
    By General reserve A/c 16,000
  3,73,000   3,73,000

Working Notes:

1) Calculation of share of Goodwill:

(a) Average profit = `"Total profit"/"No. of years"`

=`(1,80,000 + 2,00,000 + 2,50,000 + 1,50,000 + 1,20,000)/5`

= `(9,00,000)/5`

= ₹ 1,80,000

(b) Goodwill = Average profit × No. of years

= 1,80,000 × 2

= ₹ 3,60,000

(c) Share of Goodwill to ramesh = Goodwill of the firm × Ramesh’s share

= `3,60,000 × 1/6`

= ₹ 60,000

(2) Calculation of share of profit due to Ramesh:

Share of profit = Last year profit × Share of profit × Period

= `1,20,000 × 1/6 × 6/12`

= ₹ 10,000 (Profit and Loss Suspense A/c)

(3) Interest on Capital is calculated for six months.

∴ Interest = `2,40,000 × 6/12 × 5/100` = ₹ 6,000

(4)

Dr. Profit and Loss Adjustment Account Cr.
Particulars Amount (₹) Particulars Amount (₹)
To Plant and Machinery A/c 5,000 By R.D.D. A/c 5,000
To Partners’ Capital A/cs:   By Investments A/c 60,000
Rahul 33,000   By Creditors A/c 6,000
Rohit 22,000      
Ramesh 11,000 66,000    
  71,000   71,000
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Reconstitution of Partnership (Death of Partner)
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Q 2.
Chapter 5: Reconstitution of Partnership (Death of Partner) - Exercise 5.2 (Practical Problems) [Page 202]

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Balbharati Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board
Chapter 5 Reconstitution of Partnership (Death of Partner)
Exercise 5.2 (Practical Problems) | Q 2. | Page 202

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Balance Sheet as on 31st March 2019
Liabilities Amount ₹ Assets Amount ₹
Bank Loan 25,000 Furniture 50,000
Creditors 20,000 Land & Building 50,000
Bills Payable 5,000 Motor Car 20,000
Reserve Fund 30,000 Sundry Debtors 50,000
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  2,60,000   2,60,000

Mr. Virendra died on 31st August 2019 and the Partnership deed provided that. That the event of the death of Mr. Virendra his executors be entitled to be paid out.

1. The capital to his credit at the date of death.

2. His proportion of Reserve at the date of the last Balance sheet.

3. His proportion of Profits to date of death based on the average profits of the last four years.

4. His share of Goodwill should be calculated at two years purchase of the profits of the last four years for the year ended 31st March were as follows -

2016 ₹ 40,000
2017 ₹  60,000
2018 ₹ 70,000
2019 ₹ 30,000

5. Mr. Virendra has drawn ₹ 3000 p.m. to date of death, There is no increase and Decrease the value of assets and liabilities.

Prepare Mr. Virendras Executors A/c


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:

  1. Mohit's capital account showing amount payable to his executor.
  2. Give working note of Mohit's share of goodwill and profit up to the date of his death.

Rakesh, Mahesh & Mukesh were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1 respectively. Balance Sheet as on 31st March, 2019 as under:

Liabilities Amount (₹) Assets   Amount (₹)
Capital A/c:   Plant & Machinery   40,000
Rakesh 30,000 Motor Truck   20,000
Mahesh 20,000 Investment   18,000
Mukesh 10,000      
Bank Loan 20,000 Debtors 16,000 14,000
Creditors 8,000 Less: RDD  2,000
Bills Payable 18,000 Bank   14,000
  1,06,000     1,06,000

Mukesh Died on 30th June, 2019 and following adjustments were made:

  1. Assets were revalued as: Plant & Machinery ₹ 44,000, Motor Truck ₹ 18,000, Investment ₹ 17,000.
  2. All debtors were good.
  3. Goodwill of the firm valued at two times the average profits of the last five years. No Goodwill account to be shown in the books of the firm.
  4. Mukesh's share of profit up to his death to be calculated on the basis of average profits last two years.
  5. Five years Profits were - I year ₹ 6,000, II year ₹ 11,000, III year ₹ 7,000, IV year ₹ 12,000, V year ₹ 24,000 respectively.

Prepare Revaluation A/c, Partners Capital A/c and Balance Sheet as on 1 st July, 2019.


Roohi, Mona, Meena were partners in a business sharing profits and losses in the ratio of 2 : 1 : 1 respectively. Their balance sheet as on 31st March, 2019.

Balance sheet as on 31st March, 2019
Liabilities   Amount (₹) Assets Amount (₹)
Capital A/c:     Plant & Machinery 60,000
Roohi   60,000 1,64,000 Debtors 50,000
Mona 70,000 Furniture stock 30,000
Meena 34,000 Bank 60,000
Creditors   18,000    
Bills Payable   2,000    
General Reserve   16,000    
    2,00,000   2,00,000

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  1. Plant & machinery was to be revalued at ₹ 70,000 and RDD is to be created of ₹ 2,000.
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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
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Prem 2,40,000    
Verma 2,00,000    
Sharma 1,76,000    
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  2. 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
  3. Premises be valued at ₹ 2,80,000 and R.D.D. of ₹ 8,000 be created on debtors.
  4. Drawing of Prem up to the date of his death were ₹ 15000 per month.
  5. Interest on capital is allowed at 10% p.a. and to be charged on drawing at ₹ 4000.
  6. 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.


Arun, Varun and Karun were partners in a business sharing profits and losses in the ratio of 2 : 2: 1 respectively. Their Balance sheet as on 31st March, 2019 was as under :

Balance Sheet as on 31st March,2019
Liabilities Amount ₹ Assets   Amount ₹
Capital Account:   Land and Building   27,900
Arun 20,000 Investment   15,000
Varun 20,000 Furniture   8,000
Karun 10,000 Debtors 10,400 10,000
Creditors 16,000 Less: R.D.D 400
Bank Loan 4,000 Bank   4,100
    Goodwill   5,000
  70,000     70,000

On 1st July, 2019 Karun died and the following adjustments were made:

  1. All the debtors were considered as good.
  2. Bank Loan were paid off.
  3. Furniture was depreciated by ₹ 550.
  4. Investments were sold out in the Market at 10% profit.
  5. Goodwill of the firm was valued at ₹ 7,500. It was to be raised in the books.
  6. Karun was entitled to get his share in the profit up to the date of his death. Profit for 2019-2020 was estimated at ₹ 5,000.
  7. The amount due to Karun’s Executor was paid by NEFT.

Prepare:

  1. Profit and Loss Adjustment A/c.
  2. Partners’ Capital Account.
  3. Balance sheet of New Firm.

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.


A person who died is known as ______.


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.


The Balance Sheet of Karma, Punya and Bandhan who were sharing Profits and Losses in the ratio of 3 : 2 : 1 is as follows:

Balance Sheet as on 31st March, 2022
Liabilities Amount (₹) Assets Amount (₹)
Bank Overdraft 27,000 Bank 72,000
Creditors 1,27,500 Debtors 45,000
Bills Payable 60,000 Land and Building 60,000
Bank Loan 2,25,000 Machinery 1,20,000
General Reserve 40,500 Investments 60,000
Capital Accounts:   Computers 60,000
Karma 30,000 Stock 1,35,000
Punya 30,000 Patents 18,000
Bandhan 30,000    
  5,70,000   5,70,000

Punya died on 1st October, 2022 and the following adjustments were made:

(1) Goodwill of the firm is valued at ₹ 45,000.

(2) Land & Building and Machinery were found to be undervalued by 20%.

(3) Investments are valued at ₹ 90,000.

(4) Stock to be undervalued by ₹ 7,500 and a provision of 10% as Debtors was required.

(5) Patents were valueless.

(6) Punya 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. Punya's drawings till date of death was ₹ 37,500.

Prepare Partner's Capital Accounts.


Suresh, Naresh and Paresh were equal partners. On 31st March, 2019 their Balance sheet was as follows:

Balance Sheet as on 31st March, 2019
Liabilities Amount
(₹)		 Assets Amount
(₹)
Capital Accounts:   Land and Building 2,00,000
Suresh 2,50,000 Furniture 1,50,000
Naresh 1,00,000 Debtors 1,50,000
Paresh 1,00,000 Cash 1,00,000
Sundry creditors 1,50,000    
  6,00,000   6,00,000

Suresh died on 30th June, 2019 and the following adjustments were agreed as:

  1. Furniture was to be adjusted to its market price of ₹ 1,70,000.
  2. Land and building was to be depreciated by 10%.
  3. Provide R.D.D. at 5% on debtors.
  4. The profit up to the date of death of Suresh is to be calculated on the basis of average profit of last year which was ₹ 90,000.

Prepare:

  1. Profit and loss adjustment account.
  2. Partners’ capital account.
  3. Balance sheet of the continuing firm.

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