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12th | Death Of A Partner | Question No. 6 To 10 | Ts Grewal Solution 2023-2024

Question 6:


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, 2023. 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.

 

Answer:


Journal

Date

Particulars

L.F.

Debit

 (`)

Credit

 (`)

2021

 

 

 

 

June 30

X’s Capital A/c

Dr.

 

15,000

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

    To Y’s Capital A/c

 

 

 

20,000

 

(Y’s share of goodwill adjusted through X and Y’s Capital Account in gaining ratio, i.e. 3 : 1)

 

 

 

 

 

 

 

 

 

 

June 30

Profit and Loss Suspense A/c

Dr.

 

12,500

 

 

   To Y’s Capital A/c

 

 

 

12,500

 

(Y’s profit share till his death debited to P&L Suspense A/c)

 

 

 

 

 

 

 

 

 

 

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

 

Question 7:


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, 2023. The firm's profits for the last four years ended 31st December, were as: 
2020  ` 1,20,000; 2021 −
 ` 80,000; 2022 −  ` 40,000; 2023 −  ` 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.

 

Answer:


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)

Journal

Particulars

L.F.

Debit

`

Credit

`

P’s Capital A/c

Dr.

 

48,000

 

S’s Capital A/c

Dr.

 

12,000

 

To R’s Capital A/c

 

 

60,000

(R’s share of goodwill adjusted)

 

 

 


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 8:


P, Q and R were partners in a firm sharing profits in the ratio of 3:2:1. P dies and the new profit-

sharing ratio of Q and R was agreed to be equal. On P's death, goodwill of the frm was valued at 60,000:

Pass the necessary entries for the treatment of goodwill under the following conditions:

(a) When Goodwill Account is raised and written off.

(b) When Goodwill Account is raised with P's Share of goodwill and written off.

(c) When goodwill is adjusted without opening Goodwill Account.

Answer:


(a) When Goodwill Account is raised and written off.

 

Date

Particulars

 

Dr. (`)

Cr. (`)

(i)

Goodwill A/c

Dr.

60,000

 

 

To P's Capital A/c

 

 

30,000

 

To Q's Capital A/c

 

 

20,000

 

To R's Capital A/e

 

 

10,000

 

(Being Raised)

 

 

 

(ii)

Q's Capital A/c

 

30,000

 

 

R's Capital Ale

 

30,000

 

 

 To Goodwill A/c

 

 

60,000

 

(Being Written-off)

 

 

 

 

(b) When Goodwill Account is raised with P's Share of goodwill and written off.

Date

Particulars

 

Dr. (`)

Cr. (`)

(i)

Goodwill A/c

Dr.

30,000

 

 

To P's Capital A/c

 

 

30,000

 

(Being Raised)

 

 

 

(ii)

Q's Capital A/c

 

10,000

 

 

R's Capital Ale

 

20,000

 

 

 To Goodwill A/c

 

 

30,000

 

(Being Written-off)

 

 

 

 

(c) When goodwill is adjusted without opening Goodwill Account.

Date

Particulars

 

Dr. (`)

Cr. (`)

 

Q's Capital A/c

 

10,000

 

 

R's Capital Ale

 

20,000

 

 

 To Goodwill A/c

 

 

30,000

 

(Being Written-off)

 

 

 

 

Working Note:

 Qs Gain = 1/2- 2/6= 1/6;

R'S Gain = 1/2-1/6 =2/6

and Gaining Ratio = 1:2.

 

Question 9: 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.

Calculate Navita’s share of profit. (CBSE 2019)


 

Answer:


Sales during that period of the firm from 1st April, 2017 to 30th June, 2017 ` 6,00,000

The rate of profit during the past four years had been 10% on sales

Profit of the firm from 1st April, 2017 to 30th June, 2017 is ` 6,00,000 × 10/100 = ` 60,000

Share of Profit is ` 60,000 × 2/6 = ` 20,000

 

Question 10: Anil, Sunil and Hari were partners sharing profits equally. Sunil died on 31st December, 2022. In terms of the partnership deed, accounts were prepared for the period ended 31st December, 2022 and net profit was determined at `6,00,000. Pass the Journal entry for the profit share of the partners.


 

Answer:


Date

Particulars

 

L.F.

(Dr.) `

(Cr.) `

2020

31st Dec.

Profit and Loss Appropriation A/c

  To Anil’s Capital A/c

  To Sunil’s Capital A/c

  To Hari’s Capital A/c

(Being profit distributed)

Dr.

 

6,00,000

 

2,00,000

2,00,000

2,00,000

Working Notes:

Share of each partner is Equal (1:1:1)

Share of each partner = 6,00,000 × 1/3 = 2,00,000

 

Ts Grewal Solution 2023-2024

Click below for more Questions

Class 12 / Volume – I

Chapter 6 – Death of a Partner

 

Question No. 1 To 5

Question No. 6 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 And 37