question_answer

Nisha and Saisha were partners. Nisha died on 30th April, 2017. The partnership deed provided for the following :

(i) Profits to be divided as Nisha \[\frac{1}{2}\], Saisha \[\frac{1}{3}\] and \[\frac{1}{6}th\] to be transferred to reserves.

(ii) The accounts are closed on 31st March each year.

(iii) In the event of the death of a partner, the executors will be entitled to the following:

(a) Capital to the credit of the deceased partner on the date of the death.

(b) Interest on capital at 12% p.a.

(c) Proportion of profit to the date of death based on the average profits credited for the last 3 years.

(d) Share of goodwill based on three years' purchase of the average profits of the preceding 3 years.

Additional Information Nisha's capital Rs. 3,60,000; Saisha's capital Rs. 2,40,000; reserves Rs. 90,000; cash Rs. 3,30,000 and investment Rs. 2,10,000. Prepare Nisha's capital account to be presented to her executor who died on 30th April, 2017. The profits for the three proceeding years were Rs. 2,52,000, Rs. 2,70,000 and Rs. 2,97,000.

Answer:

Transferred to Nisha's executor's A/c = Rs. 9,22,650