Accountancy > Accounting For Partnership Firms > Retirement And Death Of A Partner
Aditi, Renu and Varsha were partners in a firm sharing profits and losses in the ratio of 3:2:5. On 31st March, 2023 their Balance Sheet was as under:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capitals: Aditi 5L, Renu 4L, Varsha 3L | 12,00,000 | Buildings | 6,00,000 |
| General Reserve | 1,00,000 | Machinery | 3,00,000 |
| Creditors | 2,00,000 | Stock | 1,00,000 |
| Patents | 1,50,000 | ||
| Debtors | 2,50,000 | ||
| Cash | 1,00,000 | ||
| Total | 15,00,000 | Total | 15,00,000 |
Varsha died on 31st July, 2023. The partnership deed provided for the following, on the death of a partner: (i) Interest on capital was to be provided @ 6% p.a. (ii) Goodwill of the firm was to be valued at 3 years purchase of average profits of the previous five years which were ₹90,000. (iii) Varsha's share of profit or loss till the date of death was to be calculated on the basis of sales. Sales for the year ended 31st March, 2023 amounted to ₹60,00,000 and that from 1st April, 2023 to 31st July, 2023 amounted to ₹15,00,000. The profit for the year ended 31st March, 2023 was ₹12,00,000. Prepare Varsha's Capital Account to be rendered to her executors.
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