Accountancy > Accounting For Partnership Firms > Retirement And Death Of A Partner
Adayant, Shifa and Rohan were partners in a firm sharing profits and losses in the ratio of 2: 1: 2. Their Balance Sheet as at March, 2024 stood as follows:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capitals: | Building | 4,10,000 | |
| Adayant 4,00,000 | Investments | 1,32,500 | |
| Shifa 1,20,000 | Stock | 17,500 | |
| Rohan 1,80,000 | 7,00,000 | Debtors | 63,000 |
| General Reserve | 1,20,000 | Cash at Bank | 1,37,000 |
| Bills Payable | 1,40,000 | Cash at Hand | 3,20,000 |
| Creditors | 1,20,000 | ||
| Total | 10,80,000 | Total | 10,80,000 |
Shifa died on June, 2024. As per the partnership deed, the executors of Shifa were entitled to: (i) Amount standing to the credit of her capital account. (ii) Interest on capital which was ₹5,750. (iii) Her share of goodwill which was ₹42,000. (iv) Her share in the profits of the firm from the date of the last Balance Sheet up to the date of death which amounted to ₹76,250. Shifa's executors were paid half of the payable amount immediately and the balance amount was to be paid in two equal yearly instalments along with interest 8% p.a. Pass necessary journal entries for the above transactions on Shifa's death.
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