Question

Meena, Beena and Veena were partners in a firm sharing profits & losses equally. Their balance sheet as on 31^st March, 2022 was as follow:

Balance Sheet of Meena, Beena and Veena as on 31st March, 2022
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capitals:			Plant and Machinery		2,40,000
Meena	1,50,000	3,25,000	Stock		60,000
Beena	1,00,000		Sundry Debtors		35,000
Veena	75,000		Cash at Bank		50,000
General Reserve		30,000
Sundry Creditors		30,000
		3,85,000			3,85,000

Veena died on 30^th June,2022. According to the partnership deed, the executors of the deceased partner were entitled to:

1. Balance in Capital account
2. Salary till the date of death @ ₹ 25,000 p.a.
3. Share of Goodwill calculated on the basis of twice the average profits of past three years.
4. Share of profit from the closure of last accounting year till the date of death on the basis of average of three completed years' profits before death.
5. Profits for 2019-20, 2020-21 and 2021-22 were ₹ 1,20,000, ₹ 90,000 and ₹ 1,50,000 respectively.

Veena withdrew ₹ 15,000 on 1^st June, 2022 for paying her daughter's school fees.

Prepare Veena's capital account to be rendered to her executors.

Answer 1

Dr.	Veena's Capital Account				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2022			2022
1 June	To Drawing A/c	15,000	30 June	By Balance b/d	75,000
30 June	To Veena's Executor's A/c (Balancing Figure)	1,66,250	"	By Salary	6,250
			"	By Beena's Capital A/c (Goodwill)	40,000
			"	By Meena's Capital A/c (Goodwill)	40,000
			"	By Profit & Loss Suspense A/c	10,000
			"	By General Reserve	10,000
		1,81,250			1,81,250

Working Note:

1. Goodwill
   Average Profit `= (1,20,000 + 90,000 + 1,50,000)/3= ₹ 1,20,000`
   Goodwill = `2xx1,20,000= ₹ 2,40,000`
   Share of Veena `= 2,40,000xx1/3 = ₹ 80,000`
   Goodwill `=80,000 xx 1/2 = ₹ 40,000` each by Meena and Beena
2. Share of Profit
   Profit = ₹ 1,20,000 yearly        ...[On the basis of average of past 3 years profit]
   Share of profit `= 1,20,000 xx3/12 xx1/3 =₹ 10,000`
   Salary `= 25,000 xx 3/12 =₹ 6,250`
   General Reserve `= 30,000 xx1/3 =₹ 10,000`