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12th | Death  of a Partner | Question No.  36 To 38 | Ts Grewal Solution 2022-2023

Question 36:


X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2021, their Balance Sheet was as follows:
  

Liabilities

 ( `)

Assets

 ( `)

Trade Creditors

1,20,000

Cash at Bank

1,80,000

Bills Payable

80,000

Stock

1,40,000

General Reserve

60,000

Sundry Debtors

80,000

Capital A/cs:

 

Building

3,00,000

  X

7,00,000

 

Advance to Y

7,00,000

  Y

7,00,000

 

Profit and Loss A/c

3,20,000

  Z

60,000

14,60,000

 

 

 

17,20,000

 

17,20,000

 

 

 

 

   
Y died on 30th June, 2021. The Partnership Deed provided for the following on the death of a partner:
(i) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2021, 31st March, 2020, 31st March, 2019, 31st March, 2018 and 31st March, 2017 were 
` 3,20,000 (Loss);  ` 1,00,000;  ` 1,60,000;  ` 2,20,000 and  ` 4,40,000 respectively.
(ii) Y's share of profit or loss from 1st April, 2021 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2021.
You are required to calculate the following:
(a) Goodwill of the firm and Y's share of goodwill at the time of his death.
(b) Y's share in the profit or loss of the firm till the date of his death.
(c) Prepare Y's Capital Account at the time of his death to be presented to his executors. 

 

Answer:


Y’s Capital  Account

Dr.

 

Cr.

Particulars

`

Particulars

`

Profit & Loss A/c

1,28,000

Balance b/d

7,00,000

Profit & Loss Suspense (Share of Loss)

32,000

General Reserve

24,000

Advance to Y
 

7,00,000

X’s Capital A/c
Z ’s Capital A/c

64,000
32,000

 

 

Y’s Executors A/c

40,000

 

 

 

 

 

8,20,000

 

8,20,000

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of Share in General Reserve

Reserve=60,000×2/5=
` 24,000


WN2: Calculation of Share in Goodwill

Goodwill=Average Profit×No. of years' Purchase=1,20,000×2=
` 2,40,000

Y's share in Goodwill=2,40,000×2/5=` 96,000, should be contributed by X & Z in 2:1

Average Profit=Total Profits of past years given/Number of year =1,00,000+1,60,000+2,20,000+4,40,000−3,20,000/5=` 1,20,000


WN3: Calculation of Profit & Loss Suspense


Profit & loss Suspense (Loss)=3,20,000×2×3/5×12=` 32,000

Question 37: Arun, Bhim and Nakul are partners in a firm sharing profits in the ratio of 1: 1:3. Their Capital Accounts showed the following balances on 1st April, 2018:


Arun- ` 2,00,000; Bhim- ` 1,50,000 and Nakul- ` 4,50,000.

Firm closes its accounts every year on 31st March. Bhim died on 31st March, 2019. In the event of death of any partner, the Partnership provides for the following:

(i) Interest on capital will be allowed to deceased partner only from the first of day of the accounting year till the date of his death @10% 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 the last three years. The profits of the firm for the last three years ended 31st March, were: 2017- ` 90,000; 2018 ` 2,00,000 and 2019- ` 1,60,000.

(iii) His share of Profits till the Date of Death: The profit of the firm for the year ended 31st March, 2019 was ` 1,60,000 before providing for interest on capital. Bhim’s Executor was paid the sum due in two equal annual instalments with interest @ 10% p.a.

Prepare Bhim’s Capital Account as on 31st March, 2019 to be presented to his executor and his Executor’s Loan Account for the year ending 31st March, 2020 and 31st March, 2021.

 

Answer:


Bhim’s Capital Account

Particulars

Dr. `

Particulars

Cr. `

To Bhim’s Executors A/c

2,54,000

By Balance b/d

1,50,000

 

 

By B’s Capital A/c

(WN-2)

15,000

 

 

By C’s Capital A/c

(WN-2)

45,000

 

 

By Interest on Capital A/c (WN-3)

15,000

 

 

By P&L Suspense A/c

29,000

 

 

 

 

 

2,54,000

 

2,54,000


Working notes:

WN-1 Calculation of goodwill

Average Profit = 90,000+2,00,000+1,60,000/3=1,50,000

Firm’s Goodwill = 1,50,000 × 2=3,00,000

Bhim’s Share of Goodwill = 3,00,000×1/5 = ` 60,000

Goodwill Share of Bhim’s is in Goodwill will be compensated by Arun and Nakul in 1:3

Arun = 1,05,000× 1/4 = 15,000

Nakul = 1,05,000× 3/4 = 45,000

 

WN-2 Bhim’s share of Profit till the date of death

Interest on Capital = 1,50,000×10/100=15,000

Profit After Interest on Capital = 1,60,000-15,000 =1,45,000

Bhim’s share of Profit = ` 1,45,000×1/5=29,000

 

Ts Grewal Solution 2022-2023

Click below for more Questions

Class 12 / Volume – I

Chapter 1 – Death of a Partner

 

Question No. 1 To 5
Question No. 5 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30
Question No. 31 To 35
Question No. 36 To 38

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12th TS Grewal’s Accountancy Solutions

Ts Grewal Solution 2022-2023

Ts Grewal Solution 2021-2022

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