OMTEX CLASSES: Shanti, Samadhan and Sangarsh were sharing profits and losses in the ratio of 7: 5: 4.

Shanti, Samadhan and Sangarsh were sharing profits and losses in the ratio of 7: 5: 4.

Shanti, Samadhan and Sangarsh were sharing profits and losses in the ratio of 7: 5: 4.

Their balance sheet as on 31st .03.2013 was as follows:

Balance Sheet as on 31st March,2013.


Liabilities
Amount
Assets
Amount
Capitals:

Furniture
17000
Shanti
23000
Machinery
18000
Samadhan
15000
Building
16000
Sangharsh
12000
Cash
37000
Bills Payable
4000


Creditors
8000


Loan
10000


General Reserve
16000







88000

88000

Sangharsh died on 30 th June, 2013, and the following adjustments were agreed as per deed.

(1) Furniture, Machinery and Building are to be revalued at Rs. 16,700, Rs. 16,200, Rs. 30,100 respectively.

(2) Sangharsh’s share in goodwill is to be valued from firm’s goodwill which was valued at two times of the average profit of last three years.
Profits of the last three years - Rs. 30,000, Rs. 25,000, Rs. 20,000.

(3) His profit up to the date of death is to be calculated on the basis of profit of last year.

(4) Sagharsh was entitled to get a salary of Rs. 800 per month.

(5) Interest on capital at 10% to be allowed.

(6) Sangharsh’s drawing up to the date of death was Rs. 600 per month.

Prepare : (i) Sangarsh’s capital account showing amount payable to his executor.

(ii) Give working notes for share of goodwill and profit.

Solution:
In the books of the firm
Sangarsh’s Capital Account.


Particulars
Amount
Particulars
Amount
To Drawings A/c
1800
By Balance c/d
12000
To Executor’s Loan A/c
33650
By General Reserve A/c
4000


By P/L Adjustment A/c
3000


By Goodwill A/c
12500


By P/L Suspense A/c
1250


By Salaries A/c
2400


By Interest on Capital A/c
300





35450
35450