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

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  5000 Rakesh 5000 Mahesh 5000 15000 55000 55000

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