CBSE 2025, Set 2

Question

A, B and C were partners in a firm sharing profits and losses in the ratio of 3:2:1. B died on 30th June, 2023. At the time of his death, B's capital was ₹ 3,00,000. According to the partnership deed, his legal representatives are entitled to the following:
(i) Interest on capital @ 10% p.a.
(ii) His share in the profit upto the date of death to be calculated on the basis of last year's profit. Last year's profit was ₹ 1,20,000.
(iii) His share of goodwill to be calculated on the basis of 1.5 years purchase of average profits of last three years. The profits for the last three years were ₹ 1,20,000; ₹ 80,000 and ₹ 1,00,000.

Prepare B's Capital Account to be rendered to his executors.

Edvaya · Accepted Answer

The correct answer is Subjective. **Books of A, B and C** **B's Capital A/c** | Dr. Particulars | Amount (₹) | Cr. Particulars | Amount (₹) | |---|---|---|---| | To B's Executors A/c (Balancing figure) | 3,67,500 | By Balance b/d | 3,00,000 | | | | By Interest on Capital A/c (3,00,000 × 10% × 3/12) | 7,500 | | | | By P&L Suspense A/c (1,20,000 × 3/12 × 2/6) | 10,000 | | | | By A's Capital A/c (Goodwill) | 37,500 | | | | By C's Capital A/c (Goodwill) | 12,500 | | **Total** | **3,67,500** | **Total** | **3,67,500** | *Working Note for Goodwill:* Average Profit = (1,20,000 + 80,000 + 1,00,000) / 3 = ₹ 1,00,000. Firm's Goodwill = 1,00,000 × 1.5 = ₹ 1,50,000. B's Share = 1,50,000 × 2/6 = ₹ 50,000. Gaining Ratio (A:C) = 3:1. A compensates = 50,000 × 3/4 = ₹ 37,500. C compensates = 50,000 × 1/4 = ₹ 12,500.

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Accountancy > Accounting For Partnership Firms > Death Of A Partner

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