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Minaxi, Ramesh and Poonam Were Partners Sharing Profits and Losses in the Proportion to Their Capitals, Their Balance Sheet of the Firm on 31st March, 2012 Was as Under: - Book Keeping and Accountancy

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Minaxi, Ramesh and Poonam were partners sharing profits and losses in the proportion to their capitals, Their Balance sheet of the firm on 31st March, 2012 was as under:

           Balance Sheet as on 31st March, 2012

Liabilities Amount (Rs) Assets Amount (Rs)
Capital   Land and Building 40,000
Minaxi 30,000 Investment 20,000
Ramesh 20,000 Debtors 16,000 14,000
Poonam 10,000 Less : R.D.D 2,000
Creditors 28,000 Stock 18,000
Reserve 18,000 Cash  14,000
  1,06,000   1,06,000

Poonam died on 1st August, 2012 and the following adjustments were made

1) Assets revalued as under-Land & Building Rs 44,000, Investment Rs 18,000, Stock Rs 17,000.

2) All debtors were good.

3) Goodwill of the firm valued at two times the average profits of the last 4 years. No goodwill account to be shown in the books of the firm.

4) Poonam’s share of profit upto her death to be calculated on the basis of average profits of last two year.

5) Profits were Rs 6,000, Rs 12,000, Rs 7,000, Rs 11,000
Prepare:
1) Profits and loss adjustment A/c
2) Balance sheet as on 1st August 2012

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Solution

            Profit and Loss Adjustment Account

Dr.                                                                               Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Investment 2,000 Land and Building 4,000
Stock 1,000 Reserve for Doubtful Debts 2,000
Loss transferred to:      
Minaxi 1,500 3,000  
Ramesh 1,000  
Poonam 500  
  6,000   6,000
 
Balance Sheet
as on Aug 01, 2012 after Poonam’s death
Liabilities Amount (Rs) Assets  Amount (Rs)
Creditors 28,000 Land and Building 44,000
Poonam's Legal Heir A/c 17,000 Debtors 16,000
Capital A/cs:   Cash 14,000
Minaxi 38,700 64,500 Investment 20,000 18,000
Ramesh 25,800 Less : Amortised  2000
    Stock 18,000 17,000
  Less : Depreciation 1,000
  Profit and loss Suspense A/c 500
  1,09,500   1,09,500

Working Notes:
Calculation of Gaining Ratio of Minaxi and Ramesh:

Old ratio = Minaxi : Ramesh : Poonam

               = 3 : 2 : 1

 New ratio of Minaxi and Ramesh = 3:2

Gaining Ratio = Old ratio - New ratio

Minaxi's Gain = `3/5 - 3/6 = 3/30`

Ramesh's Gain = `2/5 -2/6 = 2/30`

Gaining Ratio = 3:2

WN 1: Distribution of Reserve:

Minaxi will get = `18000 xx 3/6 = "Rs" 9000 `

Ramesh will get =`18000 xx 2/6 = "Rs" 6000`

Poonam will get = `18000 xx 1/6 = "Rs" 3000`

WN 2: Share of Profit of Poonam 

Average Profit =`"Total Profit"/"Number of years"`

                        = `(7000 + 11000)/2` = Rs 9000

Poonam's share of profit =`9000 xx 4/12 xx 1/6` = Rs.500

WN 3: Calculation of Share of goodwill of Poonam

i) Total Profit = 6000+12000+7000+11000 = Rs 36000

ii) Average Profit =`36000/4 = Rs 9000`

iii) Goodwill = 9000 × 2 = Rs 18000

iv) Poonam's share of goodwill = `18000 xx 1/6 = 3000`

WN 4: Partners’ Capital Accounts

                     Partners’ Capital Accounts
Dr.                                                                                Cr.

Particulars Minaxi Ramesh Poonam Particulars Minaxi Ramesh Poonam
Legal Heir’s A/c     17,000

Balance b/d

30,000 20,000 10,000
Goodwill A/c 1,800 1,200   Reserve 9,000 6,000 3,000
Balance c/d 38,700 25,800   Goodwill     3,000
        Profit and Loss Suspense A/c     500
      Profit and Loss Adjustment A/c (Profit)  1500 1000 500
  40,500 27,000 17,000   40,500 27,000 17,000
  Is there an error in this question or solution?
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 5 Reconstitution of Partnership (Death of Partner)
Practical Problems | Q 4 | Page 143
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