Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition]


Select the most appropriate answer from the alternative given below and rewrite the sentence.


Write a word, term, phrase, which can substitute the following statement.


State whether the following statement is True or False with reason.


Fill in the blank and rewrite the following sentence.


Answer in one sentence only.


Practical Problems | Q 1 | Page 202


Rajesh, Rakesh, and Mahesh were equal Partner on 31st March 2019. Their Balance Sheet was as follows 31st March 2019.


Balance Sheet as on 31st March 2019


Liabilities

Amount ₹

Assets

Amount ₹

Capital Account :


Land and Building

4,00,000

Rajesh

5,00,000

Furniture

3,00,000

Rakesh

2,00,000

Debtors

3,00,000

Mahesh

2,00,000

Stock

1,00,000

Sundry creditors

90,000

Cash

1,00,000

Bills Payable

60,000



Bank loan

1,50,000




12,00,000


12,00,000

Mr. Rajesh died on 30th June 2019 and the following adjustment were agreed as


1) Furniture was to be adjusted to its market price of 3,40,000

2) Land and Building was to be depreciated by 10%

3) Provide R.D.D 5% on debtors

4) The Profit up to the date of death of Mr. Rajesh is to be calculated on the basis of last years profit which was 1,80,000

Prepare:


1) Profit and Loss adjustment A/c

2) Partners capital account

3) Balance sheet of the continuing firm

Solution


In the books of the Partnership Firm Profit and Loss Adjustment Account


Particulars

Amount (₹)

Particulars

Amount (₹)

To Land and Building A/c

40,000

By Furniture A/c

40,000

To R.D.D. A/c

15,000

By Partners’ Capital A/c (Loss)




Rajesh

5,000




Rakesh

5,000




Mahesh

5,000

15,000


55,000



55,000

Partners’ Capital Account


Particulars

Rajesh 

(₹)

Rakesh 

(₹)

Mahesh 

(₹)

Particulars

Rajesh 

(₹)

Rakesh 

(₹)

Mahesh 

(₹)

To Profit and Loss Adjustment A/c – Loss

5,000

5,000

5,000

By Balance b/d

5,00,000

2,00,000

2,00,000

To Rajesh's Executor’s A/c

5,10,000



By Profit and Loss Suspense A/c

15,000



To Balance c/d


1,95,000

1,95,000






5,15,000

2,00,000

2,00,000


5,15,000

2,00,000

2,00,000

Balance Sheet as on 1st July 2019 

Liabilities

Amount (₹)

Amount (₹)

Assets

Amount (₹)

Amount (₹)

Capital Accounts :



Land and Building

4,00,000


Rakesh

1,95,000


Less: Depreciation

40,000

3,60,000

Mahesh

1,95,000

3,90,000

Furniture

3,00,000


Rajesh’s Executor’s Loan A/c


5,10,000

Add: Appreciation

40,000

3,40,000

Sundry Creditors


90,000

Debtors

3,00,000


Bills Payable


60,000

Less: R.D.D. (5%)

15,000

2,85,000

Bank Loan


1,50,000

Stock


1,00,000




Cash


1,00,000




Profit and Loss Suspense A/c


15,000



12,00,000



12,00,000

Working Note :

The profit of the firm last year was  1,80,000.

Proportionate profit up to the date of death for Rajesh is as follows = 180000 x (3/12) x (1/3) =  15,000


Practical Problems | Q 2 | Page 202


Rahul, Rohit, and Ramesh are in a business sharing profits and losses in the ratio of 3:2:1 respectively. Their balance sheet as on 31st March 2017 was as follows.


Balance Sheet as on 31st March 2017


Liabilities

Amount ₹

Assets

Amount ₹

Capital Account:


Debtors

1,00,000


Rahul

2,20,000

Less: R. D. D.

10,000

90,000

Rohit

2,10,000

Plant and Machinery

85,000

Ramesh

2,40,000

Investment

3,50,000

creditors

80,000

Motor lorry

1,00,000

Bills Payable

7,000

Building

80,000

General Reserve

96,000

Bank

1,48,000


8,53,000


8,53,000

On 1st October 2017, Ramesh died and the Partnership deed provided that


1. R.D.D. was maintained at 5% on Debtors

2. Plant and Machinery and Investment were valued at  80,000 and  4,10,000 respectively.

3. Of the creditors, an item of  6000 was no longer a liability and hence was properly adjusted.

4. Profit for 2017-18 was estimated at  120,000 and Ramesh share in it up to the date of his death was given to him.

5. Goodwill of the Firm was valued at two times the average profit of the last five years. Which were 

2012-13

₹ 1,80,000

2013-14

₹ 2,00,000

2014-15

₹ 2,50,000

2015-16

₹ 1,50,000

2016-17

₹ 1,20,000

Ramesh share in it was to be given to him

6. Salary 5,000 p.m. was payable to him

7. Interest on capital at 5% i.e. was payable and on Drawings  2000 were charged.

8. Drawings made by Ramesh up to September 2017 were  5,000 p.m.

Prepare


Ramesh’s Capital A/c showing the amount payable to his executors

Give Working of Profit and Goodwill

Ramesh Capital Balance  3,41,000


View Solution


In the books of the Partnership Firm Ramesh’s Capital Account


Particulars

Amount (₹)

Particulars

Amount (₹)

To Drawings A/c

30,000

By Balance b/d

2,40,000

To Interest on Drawings A/c

2,000

By Goodwill A/c

60,000

To Executor’s Loan A/c

3,41,000

By Salary A/c

30,000



By Interest on Capital A/c

6,000



By Profit and Loss Adjustment A/c – Profit

11,000



By Profit and Loss Suspense A/c

10,000



By General reserve A/c

16,000


3,73,000


3,73,000


(4) Profit and Loss Adjustment Account

Particulars

Amount (₹)

Particulars

Amount (₹)

To Plant and Machinery A/c

5,000

By R.D.D. A/c

5,000

To Partners’ Capital A/cs :


By Investments A/c

60,000

Rahul

33,000


By Creditors A/c

6,000

Rohit

22,000




Ramesh

11,000

66,000




71,000


71,000


Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.


Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.



Practical Problems | Q 3 | Page 203


Ram, Madhav, and Keshav are partners sharing Profit and Losses in the ratio 5:3:2 respectively. Their Balance Sheet as on 31st March 2018 was as follows.

Balance Sheet as on 31st March 2018

Liabilities

Amount ₹

Assets

Amount ₹

General Reserve

25,000

Goodwill

50,000

Creditors

1,00,000

Loose Tools

50,000

Unpaid Rent

25,000

Debtor

1,50,000

Capital Accounts

-

Live Stock

1,00,000

Ram

100000

Cash

25,000

Madhav

75000



Keshav

50000




3,75,000


3,75,000

Keshav died on 31 July 2018 and the following Adjustment were agreed by as per partnership deed.


1. Creditors have increased by 10,000

2. Goodwill is to be calculated at 2 years purchase of average profits of 5 years.

3. The Profits of the preceding 5 years was

2013-14

₹ 90,000

2014-15

₹ 1,00,000

2015-16

₹ 60,000

2016-17

₹ 50,000

2017-18

₹ 50,000 (Loss)

Keshav's share in it was to be given to him.

4. Loose Tools and livestock were valued at  80,000 and  1,20,000 respectively

5. R.D.D. was maintained at  10,000

6. Commission's  2000 p.m. was payable to Keshav Profit for 2018 -19 was estimated at  45000 and Keshav's share in it up to the date of his death was given to him.

Prepare


Revaluation A/c, Keshav’s capital A/c showing the amount payable to his executors.

Solution


In the books of the Partnership Firm Revaluation Account


Particulars

Amount (₹ )

Particulars

Amount (₹)

To R.D.D. A/c

10,000

By Loose Tools A/c

30,000

To Creditors A/c

10,000

By Live Stock A/c

20,000

To Partners’ capital A/c – Profit




Ram

15000

30,000

Madhav

9000

Keshav

6000


50,000


50,000

 

Keshav’s Capital Account


Particulars

Amount (₹)

Particulars

Amount (₹)

To Balance c/d

92,000

By Balance b/d

50,000



By General reserve A/c

5,000

By Commission A/c (₹ 2,000 × 4 months)

8,000

By Goodwill A/c

20,000

By revaluation A/c – Profit

6,000

By Profit and Loss Suspense A/c

3,000


92,000


92,000


Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Practical Problems | Q 4 | Page 204


Virendra, Devendra, and Narendra were partners sharing Profit and Losses in the ratio of 3:2:1. Their Balance Sheet as on 31st March 2019 was as follows.


Balance Sheet as on 31st March 2019

Liabilities

Amount ₹

Assets

Amount ₹

Bank Loan

25,000

Furniture

50,000

Creditors

20,000

Land & Building

50,000

Bills Payable

5,000

Motor Car

20,000

Reserve Fund

30,000

Sundry Debtors

50,000

Capital Account:


Bills Receivable

20,000

Virendra

90,000

Investments

50,000

Devendra

60,000

Cash at Bank

20,000

Narendra

30,000




2,60,000


2,60,000

Mr. Virendra died on 31st August 2019 and the Partnership deed provided that. That the event of the death of Mr. Virendra his executors be entitled to be paid out.


1. The capital to his credit at the date of death.

2. His proportion of Reserve at the date of the last Balance sheet.

3. His proportion of Profits to date of death based on the average profits of the last four years.

4. His share of Goodwill should be calculated at two years purchase of the profits of the last four years for the year ended 31st March were as follows -

2016

₹ 40,000

2017

₹ 60,000

2018

₹ 70,000

2019

₹ 30,000

5. Mr. Virendra has drawn  3000 p.m. to date of death, There is no increase and Decrease the value of assets and liabilities.

Prepare Mr. Virendras Executors A/c

Solution


In the books of the Partnership Firm Virendra’s Capital Account


Particulars

Amount (₹)

Particulars

Amount (₹)

To Drawings A/c

(₹ 3,000 × 5 months)

15,000

By Balance b/d

90,000

To Executor’s Loan A/c

1,50,417

By Goodwill A/c

50,000



By Profit and Loss Suspense A/c

10,417



By reserve Fund A/c

15,000


1,65,417


1,65,417



Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.


Practical Problems | Q 5 | Page 204


The Balance Sheet of Sohan, Rohan and Mohan who were sharing profits and Losses in the ratio of 3:2:1 as follows.


Balance Sheet as on 31st March 2019


Liabilities

Amount ₹

Assets

Amount ₹

Bank Overdraft

18,000

Bank

48,000

Creditors

85,000

Debtors

30,000

Bills payable

40,000

Land and Building

40,000

Bank Loan

1,50,000

Machinery

80,000

General Reserve

27,000

Investments

40,000

Capital Account :


Computers

40,000

Sohan

20,000

Stock

90,000

Rohan

20,000

Patents

12,000

Mohan

20,000




3,80,000


3,80,000

Mr. Rohan died on 1st October 2019 and the following adjustments were made.


1. Goodwill of the firm is valued at 30,000

2. Land and Building and Machinery were found to be undervalued by 20%

3. Investments are valued at  60,000

4. Stock to be undervalued by  5000 and a provision of 10% as debtors were required.

5. Patents were value less

6. Mr. Rohan was entitled to share in profits up to the date of death and it was decided that he may be allowed to retain his drawings as his share of profit. Rohan’s drawings till the date of death was  25000

Prepare Partners' capital accounts.


Solution


In the books of the Partnership firm  Partners’ Capital Accounts

Particulars

Sohan (₹)

Rohan (₹)

Mohan (₹)

Particulars

Sohan (₹)

Rohan (₹)

Mohan (₹)

To Executor’s Loan A/c

-

49,000

-

By Balance b/d

20,000

20,000

20,000

To Drawings A/c

-

25,000

-

By revaluation A/c

15,000

10,000

5,000

To Balance c/d

63,500

-

34,500

By General reserve A/c

13,500

9,000

4,500





By Goodwill A/c

15,000

10,000

5,000





By Profit and Loss Suspense A/c


25,000



63,500

74,000

34,500


63,500

74,000

34,500

Working Notes :

Revaluation Account

Particulars

Amount (₹)

Particulars

Amount (₹)

To Stock A/c

5,000

By Land and Building A/c

10,000

To R.D.D. A/c

3,000

By Machinery A/c

20,000

To Patents A/c

12,000

By Investments A/c

20,000

To Partner’s Capital A/cs – Profit




Sohan

15,000




Rohan

10,000




Mohan

15,000

30,000




50,000


50,000


(2) Firm’s goodwill =  30,000. Distribute among partners in their profit and loss ratio 3 : 2 : 1.


Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.


(5) Patents were valueless means it is loss for business.

(6) Rohan’s share in profit is  25,000 and his drawings is  25,000. Rohan is allowed to retain his drawings as his share of profit. Means write  25,000 as drawings on debit side and write  25,000 as Profit and Loss Suspense A/c on Credit side of Partners’ Capital A/c.


Book-keeping and Accountancy 12th Standard 

HSC Maharashtra State Board. Latest Syllabus.

Chapter 1: Introduction to Partnership and Partnership Final Accounts

Chapter 2: Accounts of ‘Not for Profit’ Concerns

Chapter 3: Reconstitution of Partnership (Admission of Partner)

Chapter 4: Reconstitution of Partnership (Retirement of Partner)

Chapter 5: Reconstitution of Partnership (Death of Partner)

Chapter 6: Dissolution of Partnership Firm

Chapter 7: Bills of Exchange

Chapter 8: Company Accounts - Issue of Shares

Chapter 9: Analysis of Financial Statements

Chapter 10: Computer In Accounting

 

ACCOUNTS BOARD PAPERS

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INTRODUCTION TO PARTNERSHIP

 

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