Question

The following is the Balance Sheet of Ram, Mohan and Sohan as at 31st March, 2023:

Liabilities	₹	Assets	₹
Sundry Creditors	10,000	Tools	3,000
Reserve Fund	7,500	Furniture	18,000
Capitals:		Stock	16,000
Ram	20,000	Debtors	12,000
Mohan	10,000	Cash at Bank	8,000
Sohan	10,000	Cash in Hand	500
	57,500		57,500

Ram, Mohan and Sohan shared profits and losses in the ratio of 2 : 2 : 1. Sohan died on 30th June, 2023. Under the partnership agreement the executor of Sohan was entitled to:

1. Amount standing to the credit of his Capital Account.
2. Interest on Capital which amounted to ₹ 150.
3. His share of goodwill ₹ 5,000.
4. His share of profit from the closing of the last financial year to the date of death which amounted to ₹ 750.

Sohan’s executor was paid ₹ 1,400 on 1st July, 2023 and the balance in four equal yearly instalments starting from 30th June, 2024 with interest @ 6% p.a.

Pass necessary Journal entries and draw up Sohan’s Account to be rendered to his executor and Sohan’s Executor’s Account till it is finally paid.

Answer 1

Journal Entry
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2023
June 30	Profit & Loss Suspense A/c      ...Dr.		1,500
	To Sohan’s Capital A/c			1,500
	(Being Interest credited to Sohan’s Capital Account up to 30th June)
June 30	Ram’s Capital A/c          ...Dr.		2,500
	Mohan’s Capital A/c      ...Dr.		2,500
	To Sohan’s Capital A/c			5,000
	(Being Sohan’s share of goodwill credited to his Capital Account)
June 30	Profit & Loss Suspense A/c      ...Dr.		750
	To Sohan’s Capital A/c			750
	(Being Sohan’s Share of profit credited)
June 30	Reserve Fund A/c       ...Dr.		7,500
	To Ram’s Capital A/c			3,000
	To Mohan’s Capital A/c			3,000
	To Sohan’s Capital A/c			1,500
	(Being Reserve Fund credited to Partner’s Capital Accounts)
June 30	Sohan’s Capital A/c          ...Dr.		17,400
	To Sohan’s Executors’ A/c			17,400
	(Being Balance in Sohan’s Capital Account transferred to Sohan’s Executors’ Account)
July 1	Sohan’s Executors’ A/c            ...Dr.		1,400
	To Bank A/c			1,400
	(Being Amount paid to Sohan’s Executors)

 

Sohan’s Capital A/c
Particulars	Amount (₹)	Particulars	Amount (₹)
To Sohan’s Executor’s A/c	17,400	By Balance b/d	10,000
		By Reserve Fund A/c	1,500
		By Interest on Capital A/c	150
		By Ram’s Capital A/c	2,500
		By Mohan’s Capital A/c	2,500
		By Profit & loss suspense A/c	750
	17,400		17,400

 

Sohan’s Executor’s A/c
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2023			2023
July 1	To Bank A/c	1,400	June 30	By Sohan’s Capital A/c	17,400
July 1	To Bank A/c	4,960	2024
2024			March 31	By Interest A/c	960
March 31	To Balance c/d	12,000
		18,360			18,360
2024			2024
June 30	To Bank A/c	4,720	April 1	By Balance b/d	12,000
2025			June 30	By Interest A/c	720
March 31	To Balance c/d	8,000
		12,720			12,720
2025			2025
June 30	To Bank A/c	4,480	April 1	By Balance b/d	8,000
			June 30	By Interest A/c	480
		8,480			8,480
2026			2026
June 30	To Bank A/c	4,240	April 1	By Balance b/d	4,000
			June 30	By Interest A/c	240
		4,240			4,240