Question

Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31-3-2023 their Balance Sheet was as follows:

Liabilities	Amount	Amount	Assets	Amount
Trade Payables		17,000	Building	1,04,000
Bank Loan		13,000	Inventory	16,000
Capitals:			Trade Receivables	23,000
Dev	77,000		Cash	40,000
Swati	87,000		Profit & Loss A/c	57,000
Sanskar	46,000	2,10,000
		2,40,000		2,40,000

On 30th June 2023 Dev died. According to partnership agreement Dev was entitled to interest on capital at 12% per annum. His share of profit till the date of his death was to be calculated on the basis of the average profits of last four years. The profit of the last four years was:

Years	Profit ₹
2019-20	2,04,000
2020-21	1,80,000
2021-22	90,000
2022-23 (Loss)	57,000

On 1-4-2014, Dev withdrew Rs 15,000 to pay his medical bills.

Prepare Dev's account to be presented to his executors.

Answer 1

Dev’s Capital Account
Dr.			Cr.
Particulars	Rs	Particulars	Rs
To Drawings A/c	15,000	By Balance b/d	77,000
To Profit and Loss A/c	22,800	By Interest on Capital A/c	2,310
To Dev’s Executors A/c	51,935	By Profit and Loss Suspense A/c	10,425
	89,735		89,735

Working Notes:

1. Calculation of Interest on Capital

`77000 xx 12/100 xx 3/12 = 2310`

2. Calculation of Share of Profit

Average Profits = `(2,04,000 + 1,80,000 + 90,000 - 57,000)/4 = 104250`

Dev's Share = `104250 xx 3/12 xx 2/5 = 10425`

3. Calculation of Share of Debit balance in P&L A/c

`57000 xx 2/5 = 22800`