12th | Death  of a Partner | Question No.  6 To 10 | Ts Grewal Solution 2022-2023

Keshv, Nirmal, and Pankaj are partners sharing profits in the ratio of 5: 3: 2. Pankaj died and his share is taken by Keshv. Calculate new profit-sharing ratio of Keshv and Nirmal.

Old Ratio (Keshv, Nirmal, and Pankaj) = 5: 3: 2

Pankaj died from the firm.

His profit share = 210

Pankaj’s share is taken by Keshv in entirety

New Ratio = Old Ratio + Share acquired from Pankaj

Keshv 's New Share: 5/10+2/10=7/10

Nirmal 's New Share: 3/10+0=310

∴ New Profit Ratio (Keshv and Nirmal) = 7: 3

X, Y and Z were partners in a firm sharing profit in 3 : 2 : 1. The firm closes its books on 31st March every year. Y died on 30th June, 2021. On Y's death goodwill of the firm was valued at  ` 60,000. Y's share in the profit of the firm till the date of his death was to be calculated on the basis of previous year's profit which was  ` 1,50,000.
Pass necessary Journal entries for goodwill and Y's share of profit at the time of his death.

Working Notes:
WN 1: Calculation of Y's Share of Goodwill
Goodwill of the Firm= ` 60,000

Y's Share of Goodwill = 60,000 × 2/6 = ` 20,000

20,000 will be debited to X's & Z's Capital A/c in gaining ratio of 3 : 1

X will pay = 20,000 × 3/4 = ` 15,000

Z will pay = 20,000 × 1/4 = ` 5,000 

WN 2: Calculation of Y's Share of Profit
Previous Year's Profit = ` 1,50,000

Y's share of Profit (till death) = Previous Year's Profit × Y's Profit Share × 3 months (April 01, 2021 till June 30, 2021)

Y's share of Profit (till death) = 1,50,000 × 2/6 × 3/12= ` 12,500

A, B and C were partners sharing profits in the ratio of 3 : 2 : 1. The firm closes its books on 31st March every year. B died on 30th June, 2020. On his death, Goodwill of the firm was valued at  ` 6,00,000. B's share in profit or loss till the date of death was to be calculated on the basis of previous year's profit which was  ` 15,00,000 (Loss). Pass necessary Journal entries for goodwill and his share of loss.

  Working Notes:                              

1. Calculation of B’s Share of Goodwill

2. Calculation of B’s Share of Loss till the date of his death i.e. 30^th June, 2020

P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in the Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profit credited to his account during the last four completed years.
R died on 1st January, 2021. The firm's profits for the last four years ended 31st December, were as: 
2017 −  ` 1,20,000; 2018 −  ` 80,000; 2019 −  ` 40,000; 2020 −  ` 80,000.
(a) Determine the amount that should be credited to R in respect of his share of Goodwill.
(b) Pass Journal entry without raising Goodwill Account for its adjustment.

Calculation of R’s Share of Goodwill

Profit credited to R’s Capital Account in 4 years = Net profit for last four years × R’s Share
=1,20,000+80,000+80,000+4,000×3/8          

=3,20,000×3/8=1,20,000

(b)

Working Notes:

R’s Share of Goodwill = ` 60,000

Old Ratio (P, R and S) = 4 : 3 : 1

R died.

∴ Gaining Ratio = 4 : 1

This share of goodwill is to be distributed between P and S in their gaining ratio (i.e. 4 : 1)

p’s Share of Goodwill = 60,000×4/5=48,000

S’s share of Goodwill =60,000 ×1/5=12,000

Question 10: Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of 3 :2:1. Navita died on 30th June, 2017. Her share of profit for the intervening period was based on the sales during that period, which were ` 6,00,000. The rate of profit during the past four years had been 10% on sales. The firm closes its books on 31st March every year.

Answer: