Question

Sonali, Sohan and Shivain were partners in a pen manufacturing firm. They were sharing profits and losses in the ratio of 2: 2: 1. On 31^st March, 2022 their Balance Sheet was as follows: 

Balance Sheet of Sonali, Sohan and Shivain as on 31^st March, 2022.

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)
Capitals Accounts:			Land and Building	6,00,000
Sonali	4,00,000	12,00,000	Plant and Machinery	5,00,000
Sohan	4,00,000		Debtors	1,60,000
Shivani	4,00,000		Stock	1,40,000
General Reserve		1,00,000	Cash in hand	1,20,000
Creditors		3,60,000	Cash at Bank	1,80,000
Bills Payable		40,000
		17,00,000		17,00,000

Sohan died on 30th June, 2022. According to Partnership Deed, his executors were entitled to:

1. interest on capital @12% p.a.
2. His share of goodwill which was ₹ 48,000.

3. His share of profit till the date of death was to be calculated on the basis of sales. The sales from 1^st April, 2022 to 30^th June, 2022 were ₹ 2,50,000. The sales and profits of the firm for the year ending 31^st March, 2022 were ₹ 20,00,000 and ₹ 5,00,000 respectively.

   Prepare Sohan’s Capital Account to be presented to his executors. 

Answer 1

Sohan's Capital Account
Particulars	Amount (₹)	Particulars	Amount (₹)
To Sohan's Executors A/c	5,25,000	By Balance b/d	4,00,000
		By General Reserve A/c	40,000
		By Interest on Capital A/c	12,000
		By Sonali's Capital A/c (Goodwill)	32,000
		By Shivain's Capital A/c (Goodwill)	16,000
		By Profit and Loss Suspense A/c	25,000
	5,25,000		5,25,000

Working Notes:

1. Sohan's share in General Reserve = `₹ 1,00,000 xx 2/5 = ₹ 40,000 `
2. Interest on Sohan's Capital = `₹ 4,00,000 xx 12/100xx3/12 = ₹ 12,000`
3. Sohan's Share in Goodwill = ₹ 48,000 (Given)
   This will be contributed by Sonali and Shivain in their gaining ratio,` i.e.`, 2 : 1.
   Sonali will compensate =`₹ 48,000xx2/3 = ₹ 32,000`
   Shivain will compensate =` ₹ 48,000 xx 1/3 = ₹ 16,000`
4. Calculation of Sohan's share of profit upto the date of death:
   Percentage of profit to sales for the year ended 31^st March, 2022
   `= (5,00,000)/(20,00,000)xx100`
   = 25%
   Profit upto the date of Sohan's death = 25% of ₹ 2,50,000
   `= 25/100xx 2,50,000`
   = ₹ 62,500
   Sohan's share of profit = `₹ 62,500 xx 2/5  `
   = ₹ 25,000