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Question
Tripti, Atishay and Radhika were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet as on 31-3-2019 was as follows:
Balance Sheet of Tripti, Atishay, and Radhika as on 31st March, 2019.
| Liabilities |
Amount (₹) |
Assets | Amount (₹) |
| Capitals : |
|
Plant and Machinery | 5,00,000 |
| Tripti 3,00,000 |
|
Stock | 1,10,000 |
| Atishay 2,00,000 |
|
Sundry debtors | 60,000 |
| Radhika 1,00,000 |
6,00,000 |
Cash at bank | 40,000 |
| General Reserve |
50,000 |
||
| Sundry creditors |
60,000 |
||
|
7,10,000 |
7,10,000 |
Tripti died on 30th June, 2019. According to the partnership deed, the executors of the deceased partner are entitled to :
(a) Balance in partner's capital account.
(b) Salary @ ₹ 12,500 per quarter.
(c) Share of goodwill calculated on the basis of twice the average of past three years' profits and share of profits from the closure of the last accounting year till the date of death on the basis of last year's profit. Profits for 2016-17, 2017-18 and 2018-19 were ₹ 1,00,000, ₹ 1,50,000 and ₹ 2,00,000 respectively.
(d) Tripti withdrew ₹ 20,000 on 1st May, 2019 for her personal use. Prepare Tripti's Capital Account to be rendered to her executors.
Solution
| Dr. | Tripti’s Capital A/c | Cr. | |
| Particulars |
Amount (₹) |
Particulars | Amount (₹) |
| To Drawings A/c |
20,000 |
By balance b/d | 3,00,000 |
| To Tripti’s Executors A/c |
4,90,000 |
By General Reserve A/c | 20,000 |
|
|
By Salary A/c (₹12,500 × 4) | 50,000 | |
|
|
By Atishay’s Capital A/c (WN1) | 80,000 | |
|
|
By Radhika’s Capital A/c (WN1) | 40,000 | |
|
|
By Profit & Loss Suspense A/c | 20,000 | |
|
|
(Share of profit) (WN2) | ||
|
5,10,000 |
5,10,000 | ||
Working Notes:
| (1) Calculation of Tripti’s share of goodwill | ||
| Average Profit for the last three years | = | (1,00,000 + 1,50,000 + 2,00,000) / 3 |
| = | ₹ 1,50,000 | |
| Goodwill of the firm | = | Average Profits of the last three years × Number of Years’ Purchase |
| = | ₹(1,50,000 × 2) = ₹ 3,00,000 | |
| Tripti’s share of goodwill | = | ₹ (3,00,000 × 2/5) = ₹ 1,20,000 |
| Gaining Ratio among the partners will be same as the ratio obtained by cancelling Tripti’s share | = | 2: 1 |
| (2) Calculation of Tripti’s Share of Profit | ||
| Last Year’s profit | = | ₹ 2,00,000 |
| Profits till the date of death | = | ₹ (2,00,000 × 3/12) = ₹ 50,000 |
| Tripti’s Share of Profits | = | ₹ (50,000 × 2/5) = ₹ 20,000 |
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| Ashok Capital Account | |||
| Dr. | Cr. | ||
| Date Particulars | Rs | Date Particulars | Rs |
|
2016 Dec 31 _________ Dec 31 _________ Dec 31 _________
|
15,000 ______ ______
|
2016 April 1 _________ Dec 31 _________ Dec 31 _________ Dec 31 _________ Dec 31 _________ |
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| Realisation Account | |||
| Dr. | Cr. | ||
| Particular |
Amount Rs |
Particular |
Amount Rs |
|
To Stock To Debtors To Plant and Machinery To Bank Sundry Creditors 16,000 Bills Payable 3,400 Mortgage Loan 15,000 To Bank (Outstanding repairs) To Bank (Exp.)
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10,000 25,000 40,000
34,400 400 620
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5,000 16,600 3,400 15,000
55,200 6,220 ------
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|
1,10,420 |
1,10,420 | ||
| Capital Account | |||||||
| Dr. | Cr. | ||||||
| Particulars |
Bora Rs |
Singh Rs |
Ibrahim Rs |
Particulars |
Bora Rs |
Singh Rs |
Ibrahim Rs |
|
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| Particular |
Amount Rs |
Particular Rs |
Amount Rs |
|
To Balance b/d To Realisation _______________
|
19,500 55,200 -------
|
By Realisation (liabilities) By Realisation (Unrecorded liabilities) By __________ By __________
|
34,400 400
|
| 80,920 | 80,920 | ||
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Amount Rs |
Assets |
Amount Rs |
|
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| Liabilities |
Amount Rs |
Assets | RS |
|
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4,500 |
Cash in hand Cash at bank Stock Debtors Furniture Tools |
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|
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|
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| Liabilities | Rs | Assets | Rs |
|
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2,40,000 |
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|
26,000 64,000 85,000 97,000 20,000
|
|
|
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