# On 31st March, 2014, the Balance Sheet of Pooja, Qureshi and Ross, Who Were Partners in a Firm Was as Under: - Accountancy

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On 31st March, 2014, the Balance Sheet of Pooja, Qureshi and Ross, who were partners in a firm was as under:

 Liabilities Amount (₹) Assets Amount (₹) Sundry Creditors 2,50,000 Building 2,60,000 Reserve Fund 2,00,000 Investment 1,10,000 Capital A/cs: Pooja 1,50,000 Qureshi's Loan 1,00,000 Qureshi 1,00,000 Debtors 1,50,000 Ross 1,00,000 3,50,000 Stock 1,20,000 Cash 60,000 8,00,000 8,00,000

Qureshi died on 1st July, 2014. The profit-sharing ratio of the partners was 2 : 1 : 1. On the death of a partner, the partnership deed provided for the following:
(i) His share in the profits of the firm till the date of his death will be calculated on the basis of average profits of last three completed years.
(ii) Goodwill of the firm will be calculated on the basis of total profit of last two years.
(iii) Interest on loan given by the firm to a partner will be charged at the rate of 6% p.a. or ₹ 4,000, whichever is more.
(iv) Profits for the last three years were ₹ 45,000; ₹ 48,000 and ₹ 33,000.
Prepare Qureshi's Capital Account to be rendered to his executors.

#### Solution

Qureshi’s Capital A/c

 Date Particulars Amount (₹) Date Particulars Amount (₹) 2014 2014 July 01 To Qureshi’s Loan A/c (WN3) 1,04,000 April 01 By balance b/d 1,00,000 2015 July 01 By Pooja’s Capital A/c (WN1) 13,500 March 31 To balance c/d 68,875 July 01 By Ross’s Capital A/c (WN1) 6,750 July 01 By Profit & Loss Suspense A/c (WN2) 2,625 July 01 By Reserve Fund A/c 50,000 (2,00,000 × 1/4) 1,72,875 1,72,875

Working Notes:
1. Calculation of Qureshi’s Share of Goodwill

 Goodwill = ₹ (48,000 + 33,000) = ₹ 81,000 Qureshi’s Share of Goodwill = ₹ (81,000 × 1/4) = ₹ 20,250 Gaining Ratio = Pooja : Ross = 2 : 1 Amount debited to Pooja’s Capital A/c = ₹ (20,250 × 2/3) = ₹ 13,500 Amount debited to Ross’s Capital A/c = ₹ (20,250 × 1/3) = ₹ 6,750

2. Calculation of Qureshi’’s Share of Loss till the date of his death

 Average Profit of the last three years = ₹ (45,000 + 48,000 + 33,000)/3 = ₹ 42,000 Qureshi’s share of loss till the date of death = Previous year’s loss × Qureshi’s Share of Loss × Months till the date of his death/12 = ₹ (42,000 × 1/4 × 3/12) = ₹ 2,625
Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
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#### APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 6 Retirement/Death of a Partner
Exercise | Q 68 | Page 95