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

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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 Partners
Capital 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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