question_answer

P Q and R are partners in a firm sharing profits in the ratio of 1 : 1 : 3 respectively. Their capital accounts showed the following balances on 31st March, 2017: P - Rs. 1,00,000 ; Q Rs. - 1,50,000 and R - Rs. 2,00,000. Firm closes its accounts every Year on 31st March. P died on 30th September, 2017. In the event of death of any partner, the partnership deed provides for the following:

(i) Interest on capital will be calculated at the rate of 6% p.a.

(ii) The deceased partner's share in the goodwill of the firm will be calculated on the basis of 2 years' purchase of the average profit of last three years. The profits of the firm for the last three years were Rs. 80,000; Rs. 90,000 and Rs. 1,30,000 respectively.

(iii) His share in the reserve fund of the firm will be paid. The reserve fund of the firm was Rs. 80,000 at the time of A?s death.

(iv) His share of profit till the death will be calculated on the basis of sales. It is also specified that the sales during the year 2016-2017 were Rs. 15,00,000. The sales from 1st April, 2017 to 30th September, 2017 were Rs. 5,00,000.

 The profit of the firm for the year ending 31st March, 2017 was Rs. 3,00,000. Prepare P's capital account to be presented to his legal representatives.

Answer:

Dr                                                                     P?s Capital A/c                                                 Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To P's Executors A/c	1,79,000	By Balance b/d	1,00,000
		By Interest on Capital A/c	3,000
		\[\left( 1,00,000\times \frac{6}{100}\times \frac{6}{12} \right)\]
		By Q's Capital A/c	10,000
		By R's Capital A/c	30,000
		By Reserve Fund A/c \[\left( 80,000\times \frac{1}{5} \right)\]	16,000
		By Profit and Loss Suspense A/c	20,000
	1,79,000		1,79,000

Working Notes 1. Firm's Goodwill \[=\frac{80,000+90,000+1,30,000}{3}\times 2=Rs.\,2,00,000\] P's Share of Goodwill\[=2,00,000\times \frac{1}{5}=Rs.\,40,000\] to be contributed by Q and R in gaining ratio i.e. 1 : 3. 2. Profit % \[=\frac{\text{Profit}}{\text{Sale}}\times 100=\frac{3,00,000}{15,00,000}\times 100=20%\] P's Share of Profit \[=5,00,000\times \frac{20}{100}\times 1=Rs.\,20,000\]