Question

M, B and V were partners in a firm sharing profits & losses in the ratio of 6 : 3 : 1. On 30^th September, 2022, V died. Their partnership deed provided for the following payments on the death of a partner:

1. Balance in partner's capital account. Balance in V's capital account on 31^st March, 2022 was ₹1,50,000.
2. Salary till the date of death. V was allowed a monthly salary of ₹50,000.
3. Share of goodwill which will be calculated on the basis of three years purchase of average profits of three completed years prior to death.
   The total profit of last three completed years was ₹1,50,000.
4. Share in the profits of the firm till the date of death calculated on the basis of average profits of the last three completed years.
5. v had withdrawn ₹10,000 on 1^st July, 2022 for personal use. Intereston her  drawings amounted to ₹500.

 Firm closes its accounts every year on 31^st March.

Prepare V's capital account to be presented to her executors.

Answer 1

Dr.	V's Capital Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Drawings A/c	10,000	By Balance b/d	1,50,000
To Interest on Drawings A/c	500	By Salary (50,000 x 6)	3,00,000
To V's Executor's A/c	4,57,000	By M's Capital A/c [Goodwill]	10,000
		By B's Capital A/c [Goodwill]	5,000
		By Profit & Loss Suspense A/c	2,500
	4,67,500		4,67,500

Working Note:

Goodwill = 3 x Average Profit

`=3xx(1,50,000)/3`

= ₹1,50,000

Share of V =`1,50,000 xx1/10 = ₹15,000`

Gaining Ratio of M and B = 6 : 3 = 2 : 1

15,000	2
	1

M will give `=15,000xx2/3 = 10,000`

B will give =`15,000 xx1/3 =5,000`

Share of Profit,

Average profit = ₹50,000

Share of V `=50,000xx6/12xx1/10`

= ₹2,500