question_answer

Following is the balance sheet of Hari, Ram and Shyam as at 31st December, 2016. Balance Sheet as at 31st December, 2016

Liabilities		Amt (Rs.)	Assets	Amt (Rs.)
Sundry Creditors		3,000	Tools	1,000
Reserve Fund		3,200	Furniture	8,000
Capital A/cs			Stock	6,000
Hari	10,000		Debtors	6,000
Ram	5,000		Cash at Bank	5,000
Shyam	5,000	20,000	Cash in Hand	200
		26,200		26,200

Ram died on 31st March, 2017. Under the partnership agreement, the executor of Ram was entitled to the following amounts:

(i) Amount standing to the credit of his capital account.

(ii) Interest on capital, which amounted to Rs. 62.50.

(iii) His share of goodwill Rs. 3,500.

(iv) His share of profit from the closing of the last financial year to the date of death, which amounted to Rs. 437.50.

Draw up Ram's account to be rendered to his executor.

Answer:

Dr                                                         Ram's Capital Account                                                Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Ram?s Executor A/c	10,066,67	By Balance b/d	5,000.00
		By Interest on Capital A/c	62,50
		By Reserve Fund A/c	1,066.67
		By Hari?s Capital A/c	1,750.00
		By Shyam?s Capital A/c	1,750.00
		By Profit and Loss Suspense A/c	437.50
	10,066,67		10,066,67

Working Notes 1. Ram's share of goodwill i.e. Rs. 3,500 to be distributed between Hari and Shyam in 1 : 1 ratio i.e. \[Hari\,=3,500\times \frac{1}{2}=Rs.\,1,750;\]     \[Shyam\,=3,500\times \frac{1}{2}=Rs.\,1,750\] 2. Reserve Fund \[=3,200\times \frac{1}{3}=Rs.\,1,066.67\]