Question

X, Y and Z were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. The firm closes its books on 31^st March every year. Y died on 24^th June, 2018. On Y’s death goodwill of the firm was valued at ₹ 1,20,000. Y’s share in the profits of the firm till the date of death from the last Balance Sheet was to be calculated on the basis of sales. Sales during the year 2017-18 was ₹ 15,00,000 and profit earned during the year was 3,00,000. Sales from 1^st April, 2018 to 24^th June, 2018 were ₹ 2,00,000. The total amount payable to Y’s executors on his death was ₹ 1,75,000. Thus amount was paid to them on 15.7.2018. Pass the necessary journal entries for the above transactions in the books of the firm.

Answer 1

Y’s Share in Profit upto the date of death 

= `((₹3,00,000)/(15,00,000)xx₹2,00,000)xx2/5`

= ₹ 16,000

Books of X, Y and Z Journal Entries
Date	Particulars	L.F.	A (₹)	B (₹)
2018
June 29	X’s Capital A/c    ...Dr.		32,000	-
	Z’s Capital A/c    ...Dr.		16,000	-
	To Y’s Capital A/c `(1,20,000 xx 2/5)`		-	48,000
	(Being Y’s share in Goodwill adjusted)
June 29	Profit and Loss Suspense A/c    ...Dr.		16,000	-
	To Y’s Capital A/c		-	16,000
	(Being Y’s Share in profit credited to his Capital A/c)
June 29	Y’s Capital A/c    ...Dr.		1,75,000	-
	To Y’s Executor’s A/c		-	1,75,000
	(Being amount to Y’s executor’s account)
July 15	Y’s Executor’s A/c    ...Dr.		1,75,000	-
	To Bank A/c		-	1,75,000
	(Being due amount paid to executors of Y)