Maharashtra State BoardHSC Commerce 12th Board Exam
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Sheetal, Anjali, Rajendra Were Sharing Profits and Losses as 7:5:4. Their Balance Sheet as on 31st March, 2011: - Book Keeping and Accountancy

Ledger

Sheetal, Anjali, Rajendra were sharing profits and losses as 7:5:4. Their Balance sheet as on 31st March, 2011:

           Balance Sheet as on 31st March 2012

Liabilities  Amount (Rs) Assets Amount (Rs)
Capital   Furniture 17,000
Sheetal 23,000 Machinery 18,000
Anjali 15,000 Building 16,000
Rajendra 12,000 Cash 37,000
Bills Payable 4000    
Creditors 8000  
Loan 10,000  
General Reserve 16,000  
  88,000   88,000

Rajendra died on 30th June 2012 and the following adjustments were agreed as per deed.

1) Furniture, Machinery and Building are to be revalued at Rs 16,700/-, Rs 16,200, to Rs 30,100.

2) Rajendra’s share is goodwill to be valued from firm’s goodwill which was valued at two times the average profit of last three years. Profits of last three years Rs 30,000, Rs 25,000, Rs 20,000/-.

3) His profit upto the date of death is to be calculated on the basis of last years profit.

4) Rajendra was entitled to get a salary of Rs 800/-per month.

5) Interest on capital at 10% be allowed.

6) Rajendra’s drawing upto date of death were Rs 600 p.m. 
Prepare:
1) Rajendra’s Capital A/c showing amount payable to his executor
2) Give working of share of goodwill and profit

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Solution

                    Rajendra’s Capital Account
Dr.                                                                              Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Drawings 1,800 Balance b/d 12,000
Executor’s A/c 33,650 Profit and Loss Adjustment A/c (Profit)  3,000
    Goodwill 12,500
  Profit and Loss Suspense A/c 1,250
  Salary 2,400
  Interest on Capital 300
  General Reserve 4,000
  35,450   35,450

Working Notes:

WN 1:Calculation of share of Goodwill of Rajendra

i) Total Profit = 30000+25000+20000 = Rs. 75000

ii) Average Profit = `75000/3 = "Rs" 25000`

iii) Goodwill = 25000 × 2 = Rs 50000

iv) Share of Rajendra in Goodwill = `50000 xx 4/16 = "Rs" 12,500`

WN 2: Calculation of Share of Profit of Rajendra

Profit of the last year = Rs 20000

Profit for the period = `20000 xx 3/12 = "Rs" 5000`

Share of Rajendra's Profit =`5000 xx 4/16 = Rs 1250`

WN 3: Rajendra’s Share of General Reserve

Rajendra's Share of General Reserve = `16000 xx 4/16 = "Rs" 4000`

Note:
WN 4: Profit and Loss Adjustment Account

            Profit and Loss Adjustment Account
Dr.                                                                               Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Furniture 300 Building 14100
Machinery 1800    
Profit transferred to:    
Sheetal’s Capital 5250 12000  
Anjali’s Capital 3750  
Rajendra’s Capital 3000  
  14100   14100

Note:  As per the book amount payable to Rajendra’s Executor is Rs 33,350 but as per our solution it is Rs 33,650. 

  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 2 | Page 142
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