Question

Pranav, Karan and Rahim were partners in a firm sharing profits and losses in the ratio of 2: 2: 1. On 31st March 2017 their Balance Sheet was as follows:

Balance Sheet of Pranav, Karan and Rahim as on 31.3.2017
Liabilities	Amount Rs	Assets	Amount Rs
Creditors General Reserve Capitals     Pranav    2,00,000     Karan     2,00,000     Rahim    1,00,000	3,00,000 1,50,000       5,00,000	Fixed Assets Stock Debtors Bank	4,50,000 1,50,000 2,00,000 1,50,000
	9,50,000		9,50,000

Karan died on 12.6.2017. According to the partnership deed, the legal representatives of the deceased partner were entitled to the following:

1) Balance in his Capital Account

2) Interest on Capital @12% p.a.

3) The share of goodwill. Goodwill of the firm on Karan's death was valued at Rs 60,000.

4) Share in the profits of the firm till the date of his death, calculated on the basis of last year’s profit. The profit of the firm for the year ended 31.3.2017 was Rs 5,00,000.

Prepare Karan's Capital Account to be presented to his representatives.

Answer 1

In the books of Pranav, Karan & Rahim Karan’s Capital Account
Dr.					Cr.
Date	Particulars	Rs	Date	Particulars	Rs
2017 Jun 12	Karan’s Executors A/c	3,28,800	Jun 12 Jun 12 Jun 12 Jun 12 Jun 12 Jun 12	Balance b/d Interest on Capital A/c (WN 1) Pranav's Capital (Goodwill) (WN 2) Rahim's Capital (Goodwill) (WN 2) Profit Loss Suspense A/c (WN3) General Reserve A/c	2,00,000 4,800 16,000 8,000 40,000 60,000
		3,28,800			3,28,800

Working Notes:

1) Interest on capital = `2,00,00 xx 12/100 xx 73/365 = 4800`

2) Karan’s Goodwill = `60000 xx 2/5 = 24000`

3) Profit till the date of death = `500000 xx 73/365 xx 2/5 = 40000`