question_answer

A, B and C are partners in a firm sharing profits in the proportion of 3 : 2 : 1. Their balance sheet as at 31st March, 2018 stood as follows: Balance Sheet as at 31st March, 2018

Liabilities		Amt (Rs.)		Assets	Amt (Rs.)
Bills Payable		7,200		Buildings	12,600
Creditors		8,400		Cash in Hand	2,550
General Reserve		7,200		Cash at Bank	12,870
Capital A/cs				Debtors	7,200
A	12,000			Bills Receivable	2,580
B	7,200			Stock	1,050
C	4,800		24,000	Investments	7,950
			46,800		46,800

B died on 30th June, 2018 and according to the deed, his executors are entitled to :

(i) Capital to his credit at the time of his death.

(ii) Interest on capital @ 10% p.a.

(iii) Share of general reserve.

(iv) Share of profits based on the sales during that period. Sales till 30th June was Rs. 72,000. The rate of profit was 10% on sales.

(v) Goodwill according to his share of profit to be calculated by taking twice the amount of profits of the last 3 years less 20%. The profits for the previous 3 years were:

I - Rs. 4,920,     II - Rs. 5,400 and III - Rs. 5,880. The investments were sold at par and B's executors were paid out in full. Prepare B's capital account and his executor's account.

Answer:

Amount transfer to B's executor account is Rs. 20,820