Death of a Partner Solution | March 2018 HSC Board Paper

Question: Death of a Partner

March 2018 HSC Board Paper (Q3)

Refer to the question paper images below.

In the books of the firm

Complete Solution

Profit and Loss Adjustment A/c

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Dr.Particulars

Particulars	Amount (Rs)
To R.D.D. A/c	4,000
To Revaluation Profit:
Ashish Capital A/c	3,600
Satish Capital A/c	1,200
Manish Capital A/c	1,200
Total	10,000

ParticularsCr.

Particulars	Amount (Rs)
By Machinery A/c	10,000
Total	10,000

Manish's Capital A/c

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Dr.Particulars

Particulars	Amount (Rs)
To Drawings A/c	40,000
To Interest on Drawings A/c	1,200
To Executor’s Loan A/c (Bal. Fig)	62,500
Total	1,03,700

ParticularsCr.

Particulars	Amount (Rs)
By Balance b/d	50,000
By Reserve Fund A/c	4,000
By Profit and Loss Suspense A/c	6,000
By Goodwill A/c	40,000
By Profit and Loss Adjustment A/c	1,200
By Interest on Capital A/c	2,500
Total	1,03,700

Working Notes

1. Working of Manish’s Share of Profit:

Formula: \( \text{Previous year's Profit} \times \text{Profit Sharing Ratio} \times \text{Period} \)

$$ 96000 \times \frac{1}{6} \times \frac{6}{12} = 6000 $$

2. Working of Manish’s Share of Goodwill:

Average Profit Calculation:

$$ \text{Average Profit} = \frac{48000 + 80000 + 76000 + 96000}{4} = \frac{300000}{4} = 75000 $$

Firm's Goodwill (4 times Average Profit):

$$ 75000 \times 4 = 300000 $$

Manish's Share of Goodwill:

$$ 300000 \times \frac{1}{6} = 50000 $$

(Note: There is a discrepancy in the provided solution image which shows 40000. However, based on the calculation 50000 is mathematically correct. If following the image strictly: 40000 is used in the ledger).