Question

Madhu, Shilpi and Renuka were partners in a firm sharing profits in the ratio 2 : 2: 1. The firm doses its books on 31st March every year. Shilpi died on 30th June, 2021. On Shilpi's death, the goodwill of the firm was valued at ₹ 30,000. On Shilpi's death, her share in the profits of the firm till the date of her death was to be calculated on the basis of previous year's profit which wast ₹ 60,000.

1. Calculate Shilpi's share in the profits of the firm till her death.
2. Pass necessary journal entries for the treatment of goodwill without opening goodwill account and Shilpi's share of profit till the date of her death.

Answer 1

(i) Shilpi's share in profits will be calculated for (1 April to 30 June) 3 months

Shilpi's share in profits = ₹ `60,000 xx 2/5 xx 3/12` = ₹ 6,000

(ii)

Journal Entries
Date	Particular	L.F.	Dr. (₹)	Cr. (₹)
1.	Madhu's Capital A/c   ...Dr.		8,000	-
	Renuka's Capital A/c   ...Dr.		4,000	-
	To Shilpi's Capital A/c		-	12,000
	(Being goodwill compensated by gaining partners)
2.	Profit & Loss Suspense A/c   ...Dr.		6,000	-
	To Shilpi's Capital A/c		-	6,000
	(Being share of profit transferred to retiring partner's capital A/c)