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Sunny, Honey and Rupesh Were Partners in a Firm. on 31-3-2014 Their Balance Sheet Was as Follows : Prepare Honey'S Capital Account to Be Presented to His Executors. - Accountancy

Sunny, Honey and Rupesh were partners in a firm. On 31-3-2014 their Balance Sheet was as follows :

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

General Reserve

Capitals

  Sunny    30,000

  Honey    30,000

  Rupesh  20,000

10,000

30,000

 

 

 

80,000

Plant and Machinery

Furniture

Investment

Debtors

Stock

 

40,000

15,000

20,000

20,000

25,000

 

  1,20,000   1,20,000

Honey dies on 31-12-2014. The partnership deed provides that the representatives of the deceased partner shall be entitled to:

(1) Balance in the capital account of the deceased partner.
(2) Interest on capital @ 6% p.a. upto the date of his death.
(3) His share in the undistributed profits or losses as per the balance sheet.
(4) His share in the profit of the firm till the date of his death, calculated on the basis of the rate of net profit on sales of the previous year. The rate of net profit on the sale of the previous year was 20%. Sales of the firm during the year till 31-12-2014 was Rs 6,00,000.

Prepare Honey's Capital Account to be presented to his executors.

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Solution

Honey’s Capital Account
Dr.   Cr.
Particular Rs Particular Rs

To Executor A/c

 

 

 

81,350

 

 

 

By Balance b/d

By Interest on Capital A/c

By Profit and Loss Suspense A/c

By General Reserve A/c

30,000

1,350

40,000

10,000

  81,350   81,350

Working Notes :

WN1: Calculation of Interest on Honey's Capital

Interest on Capital = `30000 xx 6/100 x 9/12 = 1350`

Honey's Share in Profits = `120000 xx 1/3 = 40000`

WN3: Calculation of Honey's Share in General Reserve

Honey's Share in General Reserve = `30000 xx 1/3 = 10000`

Concept: Preparation of Deceased Partner's Capital Account, Executor's Account
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