Question

Manika, Nishtha and Sakshi were partners in a firm sharing profits in the ratio of 2 : 2 : 1 respectively. On 31st March, 2013 their Balance Sheet was as under: 

Balance Sheet as on 31st March, 2013
Liabilities		Amount Rs	Assets	Amount Rs
Capitals:			Fixed Assets	3,60,000
Manika	2,80,000		Debtors	2,80,000
Nishtha	3,00,000		Stock	1,30,000
Sakshi	1,00,000	6,80,000	Cash	4,60,000
Reserve Fund		3,00,000
Creditors		2,50,000
		12,30,000		12,30,000

Sakshi died on 1st July, 2013. It was agreed between her executors and the remaining partners that:

(a) Goodwill of the firm be valued at 3 years' purchase of average profits for the last three years. The average profits were Rs 5,00,000.
(b) Interest on capital be provided at 12% p.a.
(c) Her share in the profits upto the date of death will be calculated on the basis of average profits for the last three years.

Prepare Sakshi's Capital Account as on 1st July, 2013.  

 

Answer 1

Sakshi’s Capital A/c
Dr.	Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Executor’s A/c		4,88,000	Balance b/d	1,00,000
			Interest on Capital (for 3 months)	3,000
			Manika’s Capital A/c	1,50,000
			Nishtha’s Capital A/c	1,50,000
			Reserve Fund	60,000
			Profit Share	25,000
		4,88,000		4,88,000