HSC Commerce (Marketing and Salesmanship) 12th Board ExamMaharashtra State Board
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# Supriya, Surekha and Sujata Were Partners Sharing Profits and Losses in the Ration of 2:2:1 Respectively. Their Balance Sheet as on 31st March 2012 Was as Follows: You Are Required to Prepare: (A) Profit and Loss Adjustment Account. (B) Sujata’S Capital Account Showing the Balance Payable to Her Executor’S Loan Account. (C) Working Notes for Calculation of (A) Goodwill and (B) Profit Till the Date of Sujata’S Death. - HSC Commerce (Marketing and Salesmanship) 12th Board Exam - Book Keeping and Accountancy

ConceptRetirement Or Death of a Partner - Adjustment of Accumulated Profits and Losses

#### Question

Supriya, Surekha and Sujata were partners sharing profits and Losses in the ration of 2:2:1 respectively. Their Balance Sheet as on 31st March 2012 was as follows:
 Balance Sheet as on 31st March 2012 Liabilities Amount (Rs) Assets Amount (Rs) Capital A/c Land and Building 50000 Supriya 40000 Stock 30000 Surekha 40000 Debtors        37500 Sujata 20000 (–) R.D.D.       2500 35000 Reserve Fund 10000 Furniture 10000 Creditors 16000 Cash at Bank 5000 Outstanding Expenses 4000 1,30,000 1,30,000

Sujata died on 1st July 2012 and the adjustments were agreed to as per the deed as follows:
(1) Land and Building to be valued at Rs. 60,000 and all debtors were good.
(2) Stock be depreciated by 10%.
(3) The drawings of Sujata up to the date of her death amounted to Rs. 2,000.
(4) Interest on capital was to be allowed at 10% p.a.
(5) The deceased partner’s share of goodwill is to be valued at 2 years’ purchase of average profit of last 3 years.
The profits were:
2009 – 10 = Rs. 15,000
2010 – 11 = Rs. 17,000
2011 – 12 = Rs. 13,000
(6) The deceased partner’s share of profit up to the date of her death should be based on the average profit of the last two years.

You are required to prepare:
(a) Profit and Loss Adjustment Account.
(b) Sujata’s Capital Account showing the balance payable to her Executor’s Loan Account.
(c) Working notes for calculation of (a) Goodwill and (b) Profit till the date of Sujata’s death.

#### Solution

 Profit and Loss Adjustment Account Dr. Cr. Particulars Amount (Rs) Particulars Amount (Rs) Stock Land and Building 10000 Profit transferred to PartnersCapital Account: Provision for Doubtful Debts 2500 Supriya       3,800 Surekha       3,800 Sujata          1,900 9500 12500 12500

 Sujata’s Capital Account Dr. Cr. Date Particulars Amount (Rs) Date Particulars Amount (Rs) Drawings 2000 Balance b/d 20000 Sujata’s Executor’s Loan A/c(Balancing Figure) 29150 Interest on Capital 500 Reserve Fund 2000 Goodwill A/c 6000 P & L Suspense A/c 750 P & L Adjustment A/c 19000 31,150 31,150

Working Notes:

WN1 Calculation of Interest on Capital

Interest on Capital = 20,000× 10/100 × 3/12 = Rs 500

WN2 Calculation of Share in Reserve Fund

Sujata's Share = 10000 x 1/5 = Rs 2000

WN3 Calculation of Goodwill

Average Profit  = (15000 + 17000 + 130000)/3 = Rs  15000

Goodwill (Firm) = 15000 x 2  = Rs  30000

Sujata's share  = 30000 x 1/5 = Rs 6000

WN4 Calculation of Share in Profit/Loss

Average Profit = (17000 + 13000)/2 = Rs 15000

Sujata's  Share = 15000 xx 3/12 xx 1/5 = Rs 750

Is there an error in this question or solution?

#### APPEARS IN

2013-2014 (October) (with solutions)
Question 3.2 | 10.00 marks
Solution Supriya, Surekha and Sujata Were Partners Sharing Profits and Losses in the Ration of 2:2:1 Respectively. Their Balance Sheet as on 31st March 2012 Was as Follows: You Are Required to Prepare: (A) Profit and Loss Adjustment Account. (B) Sujata’S Capital Account Showing the Balance Payable to Her Executor’S Loan Account. (C) Working Notes for Calculation of (A) Goodwill and (B) Profit Till the Date of Sujata’S Death. Concept: Retirement Or Death of a Partner - Adjustment of Accumulated Profits and Losses.
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