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.
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`
