Advertisement Remove all ads

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

Numerical

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.

Advertisement Remove all ads

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
  Is there an error in this question or solution?
Advertisement Remove all ads

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
Advertisement Remove all ads
Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×