Balance Sheet as on 31st
march, 2012
|
Liabilities
|
Amount
|
Assets
|
Amount
|
|
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
|
|
|
|
|
130000
|
|
130000
|
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 drawing 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 2years’ purchase of average profit of last 3
years.
The profits were:
2009 – 10 = Rs. 15000
2010 – 11 = Rs. 17000
2011 – 12 = Rs. 13000
(6) The deceased partner’s share
of profit up to the date of her death should be based on 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:
In
the books of Partnership Firm
Profit
and Loss Adjustment Account
|
Particulars
|
Amount
|
Amount
|
Particulars
|
Amount
|
Amount
|
|
To Stock A/c
(Depreciation)
|
|
3000
|
By Land & Building A/c
(Increase in value)
|
|
10000
|
|
To Partners’ Capital A/c
|
|
|
By Debtors A/c
[RDD Cancelled]
|
|
2500
|
|
Supriya
|
3800
|
|
|
|
|
|
Surekha
|
3800
|
|
|
|
|
|
Sujata
|
1900
|
9500
|
|
|
|
|
|
|
12500
|
|
|
12500
|
Sujata’s Capital A/c
|
Particulars
|
Amount
|
Particulars
|
Amount
|
|
To Drawings A/c
|
2000
|
By Balance b/d
|
20000
|
|
|
|
By Reserve Fund A/c
|
2000
|
|
|
|
By Profit & Loss Adjustment
A/c
|
1900
|
|
|
|
By Interest on Capital A/c
|
500
|
|
|
|
By Goodwill A/c
(Share in firm’s goodwill)
|
6000
|
|
|
|
By Profit & Loss Suspense
A/c
|
750
|
|
|
31150
|
|
31150
|
Working
Notes:
(i)
Valuation of Goodwill:
Average Profit = (13000+17000+15000)
÷ 3 = 45000 ÷ 3 = Rs. 15000
Goodwill = Average Profit × No.
of years’ purchase
∴ Goodwill = 15000 × 2 = Rs.
30,000
Sujata’s Share in Goodwill = Value of firm’s Goodwill × Sujata’s share
in profit
Sujata’s Share in Goodwill =
30000 × (1/5) = Rs. 6000.
Working
Profit:
Profit till the date of death of
Sujata = Average Profit of 2 years × Period
Profit till the date of death of
Sujata = [(13000 + 17000) ÷ 2 ] [3months ÷ 12 months] = Rs. 3750/-
Sujata’s share in profit = (Firm’s
Profit) × Sujata’s Share in profit = 3750 × (1/5) = Rs. 750
