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12th | Death Of A Partner | Question No. 36 and 37 | Ts Grewal Solution 2023-2024

Question 36:


 Ajay, Salil and Ravi were partners in a firm sharing profits in the ratio of 5:3:2. Ajay died on 20th February,2023. The Balance Sheet of the firm on that date was as follows:

Liabilities

 

`

Assets

`

Creditors

 

19,000

Machinery

41,000

General Reserve

 

20,000

Furniture

6,000

Loan by Ajay

 

7,000

Stock

9,000

Capital Aes:

 

 

Debtors

15,000

Ajay

12,000

 

Cash

3,000

Salil

16,000

 

Profit & Loss A/c 

10,000

Ravi

10,000

38,000

 

 

 

 

 

 

 

 

 

84,000

 

84,000

According to the Partnership Deed, on the death of a partner, the executor of the deceased partner will be entitled to:

(i) Balance in Capital Account.

(ii) His share in profit/loss on revaluation of assets and reassessment of liabilities which were as follows.

   (a) Machinery is to be revalued at 45,000 and furniture at 7,000.

   (b) Provision of 10% was to be created for Doubtful Debts.

(iii) The amount payable to Ajay was transferred to his Executors' Loan Account which was to be paid later Prepare Revaluation Account, Partners' Capital Accounts, Ajay's Executors' Account and the Balance Sheet of Salil and Ravi who decided to continue the business keeping their capital balances in their new profit-sharing ratio. Any surplus or deficit was to be transferred to Current Accounts of the partners.

 

Answer:


Revaluation a/c

Particulars

`

Particulars

`

Provision for Doubtful Debts

1,500

Machinery

4,000

Gain

3,500

Furniture

1,000

Capital A/cs;

 

 

 

Ajay - 1,750

 

 

 

Salil - 1,050

 

 

 

Ravi - 700

 

 

 

 

5,000

 

5,000

 

 

 

 

 

Capital A/c

Particulars

Ajay

Salil

Ravi

Particulars

Ajay

Salil

Ravi

To Profit & Loss A/c 

5,000

3,000

2,000

By Balance B/d

12,000

16,000

10,000

To Ajay’s Executor

25,750

-

-

By Revaluation A/c

1,750

1,050

700

To Balance C/d

-

20,050

12,700

By General Reserve

10,000

6,000

4,000

 

 

 

 

By Loan by Ajay

7,000

-

-

 

30,750

23,050

14,700

 

30,750

23,050

14,700

To Salini’s Current A/c

-

400

-

By Balance B/d

-

20,050

12,700

To Balance C/d

-

19,650

13,100

By Ravi’s Current A/c

-

-

400

 

-

20,050

13,100

 

-

20,050

13,100

 

 

 

 

 

 

 

 

 

Ajay's Executors' Account

Particulars

`

Particulars

`

To Balance C/d

25,750

By Ajay’s Capital A/c

25,750

 

25,750

 

25,750

 

Balance Sheet

Liabilities

 

`

Assets

`

Creditors

 

19,000

Machinery

45,000

Ajay's Executors' Account

 

25,750

Furniture

7,000

Salil’s Current A/c

 

400

Stock

9,000

Capital Aes:

 

 

Debtors

(15,000-1,500)

13,500

 

 

 

Cash

3,000

Salil

19,650

 

Ravi’s Current A/c

400

Ravi

13,100

32,750

 

 

 

 

 

 

 

 

 

77,900

 

77,900

 

Working Note:

Total adjusted Capital of remaining partner 20,050+12,700=32,750

Rearranged in New Profit sharing Raio 3:2

Salil’s Capital=32,750×3/5=19,650

Ravi’s Capital=32,750×2/5=13,100

 

 

Salil

Ravi

adjusted Capital

20,050

12,700

Less : New Capital

19,650

13,100

Capital adjusted through current account

400

400

Treatment

Debited

Credited

 

 

Question 37:


 Ramesh, Suresh and Dinesh were partners sharing profits and losses in the ratio of 3:2:1.Dinesh died on 1st May, 2022 on which date the capitals of Ramesh, Suresh and Dinesh after all necessary adjustments stood at 1,20,000, 80,000 and 50,000 respectively. Ramesh and Suresh decide to carry on the business for 8 months without settling the account of Dinesh. During the period of 8 months ended 31st December, 2022, profit of Rs. 40,000 is earned by the firm.

State which of the two options available with Dinesh's Executor under Section 37 of the Indian Partnership Act, 1932 should be exercised.

Also calculate the total amount payable to Dinesh's Executor if Ramesh and Suresh clear the dues of Dinesh on 31st December, 2022.

Answer:


Remaining partners Continued Business without any agreement therefore according to Section 37 of the Indian Partnership Act, 1932 executor of deceased partner can opt any of the option either of two Interest in capital or share of profit whichever is higher

 

Dinesh's Executor has the following options:

(i) Interest @ 6% p.a. on balance amount =50,000×6/100×8/12 =72,000;

OR

(ii) Share in profit earned proportionate to his amount outstanding to total capital 50,000/2,50,000* ×40,000 =8,000

*2,50,000 =1,20,000 + 80,000+50,000

Dinesh's Executor should exercise option (i) ,

Total amount payable to Dinesh's Executor = 50,000 +8,000=58,000

 

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