Balbharati solutions for Book-keeping and Accountancy
HSC Maharashtra State Board
Chapter 5 –
Reconstitution of Partnership (Death of
Partner)
Practical Problems | Q 1 | Page 202
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
Video Solution
In the books of Firm..
Dr.
Profit & Loss Adjustment A/c Cr.
|
Particulars |
Amount |
Amount |
Particulars |
Amount |
Amount |
|
To Land & Building To R.D.D. |
|
40,000 15,000 |
By Furniture By partner’s Capital A/c Rajesh (1/3) Rakesh (1/3) Mahesh (1/3) |
5,000 5,000 5,000 |
40,000 15,000 |
|
|
|
55,000 |
|
|
55,000 |
Dr. Partner’s Capital
A/c Cr.
|
Particulars |
Rajesh |
Rakesh |
Mahesh |
Particulars |
Rajesh |
Rakesh |
Mahesh |
|
To P/L Adjustment A/c To Loan A/c To Balance C/d |
5,000 5,10,000 |
5,000 1,95,000 |
5,000 1,95,000 |
By Balance b/d By P/L Suspense A/c |
5,00,000 15,000 |
2,00,000 |
2,00,000 |
|
|
5,15,000 |
2,00,000 |
2,00,000 |
|
5,15,000 |
2,00,000 |
2,00,000 |
|
Liabilities |
Amount |
Amount |
Assets |
Amount |
Amount |
|
Capital A/c: Rakesh Mahesh Rajesh’s executor’s Loan A/c Sundry Creditors Bills Payable Loan |
1,95,000 1,95,000 |
3,90,000 5,10,000 90,000 60,000 1,50,000 |
Land & Building Less:Depreciation (10%) Furniture Add:Appreciation Sundry Debtors Less: R.D.D. (5%) Stock Cash P/L Suspense A/c |
4,00,000 40,000 3,00,000 40,000 3,00,000 15,000 |
3,60,000 3,40,000 2,85,000 1,00,000 1,00,000 15,000 |
|
|
|
12,00,000 |
|
|
12,00,000 |
The basis of last years profit which was ₹1,80,000
Profit & Loss Suspense A/c
Rajesh’ Profit = 1,80,000 x 1/3 x 3/12 = 1,80,000 / 12 =Rs. 15,000
Practical Problems| Q 2 | Page 202
|
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
{April-May-June-July-August-Sept- Oct}
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 2016-2017 `
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 (Ans : Profit on Adj A/c ` 66000)
In the books of Firm..
Dr.
Profit & Loss Adjustment A/c Cr.
|
Particulars |
Amount |
Amount |
Particulars |
Amount |
Amount |
|
To Plant and Machinery To Partner’s Capital A/c Rahul (3/6) Rohit (2/6) Ramesh (1/6) |
33,000 22,000 11,000 |
5000 66,000 |
By R.D.D. (10,000 -5,000) By Investment By Creditors |
|
5,000 60,000 6,000 |
|
|
|
71,000 |
|
|
71,000 |
Dr. Ramesh’s
Capital A/c Cr.
|
Particulars |
Amount |
Particulars |
Amount |
|
To Interest on Drawings To
Drawing (5,000 x 6m) To Executor’s Loan A/c |
2,000 30,000 3,41,000 |
By Balance b/d By General Reserve By P/L Suspense A/c By Goodwill By Salary (5,000 x 6m) By Interest
on capital By
P/L Adj A/c |
2,40,000 16,000 10,000 60,000 30,000 6,000 11,000 |
|
|
3,73,000 |
|
3,73,000 |
W:N : 1 General Reserve
Ramesh = 96,000 x 1/6 = 16,000
W:N: 2 Profit and Loss Suspense A/c
Ramesh = 120,000 x 1/6 x 6/12 = 10,000
W:N : 3 Goodwill
Average Profit = Total Profit / No.of
years
= 1,80,000 + 2,00,000 + 2,50,000 + 1,50,000
+ 1,20,000 /5
= 9,00,000 /5 = 1,80,000
Goodwill of Firm = Average Profit x No.
of year Purchases
=
1,80,000 x 2 = Rs. 3,60,000
Ramesh’s Goodwill = 3,60,000 x 1/6 =
60,000
W:N 4 Interest on capital
Ramesh = 2,40,000 x 5/100 = 12000 x 6/12
= 6,000
[ 5/10 , 3/10 ,2/10 ]
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.
(April-May-June-July)
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
In the books of Firm..
Dr.
Profit & Loss Adjustment A/c Cr.
|
Particulars |
Amount |
Amount |
Particulars |
Amount |
Amount |
|
To Creditors To R.D.D. To Partner’s Capital A/c Ram (5/10) Madhav (3/10) Keshav (2/10) |
15,000 9,000 6,000 |
10,000 10,000 30,000 |
By Appreciation on: Loose tool Live stock |
30,000 20,000 |
50,000 |
|
|
|
50,000 |
|
|
50,000 |
Dr. Keshav’s
Capital A/c Cr.
|
Particulars |
Amount |
Particulars |
Amount |
|
To Executor’s Loan A/c |
92,000 |
By Balance b/d By General Reserve By
Goodwill By
Commission (Rs.2,000 x 4 month) By P/L
Suspense A/c By P/L
Adjustment A/c |
50,000 5,000 20,000 8,000 3,000 6,000 |
|
|
92,000 |
|
92,000 |
W:N: 1 General Reserve
Keshav = 25,000 x 2/10 = 2500 x 2 = 5,000
W:N 2 Calculation of Goodwill
Average Profit = Total profit / No. of year
= 90,000 + 1,00,000 + 60,000 + 50,000 – 50,000 / 5 = 2,50,000 / 5 = 50,000
Goodwill of Firm = Average profit x No. of years
Purchases
=
50,000 x 2 = 1,00,000
Keshav’s Goodwill = 1,00,000 x 2/10 = 10,000 x 2 =
20,000
W:N 3 Calculation of P/L Suspense A/c:
= 45,000 x 2/10 =4500 x 2 = 9,000 x 4/12 = 36,000 /
12 = 3,000
(3/6 2/6 1/6)
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. (April – May- June- July
-August)
1. The capital to his credit at the date of death.
2. His proportion
of Reserve at the date of the last Balance sheet.(Ratio)
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. Virendra's Executors A/c
Video Solution
In the books of Firm..
Dr.
Virendra’s Capital A/c Cr.
|
Particulars |
Amount |
Particulars |
Amount |
|
To Drawing A/c (3,000 x 5 month) To Executor’s Loan A/c |
15,000 1,50,417 |
By Balance b/d By Reserve Fund By P/L Suspense A/c By Goodwill |
90,000 15,000 10,417 50,000 |
|
|
1,65,417 |
|
1,65,417 |
W:N: 1 Reserve Fund
30,000 x 3/6 = 5,000 x 3 = 15,000
W:N 2 Calculation of P/L Suspense A/c
Average Profit = Total profit/ No. of year
= 40,000+ 60,000+ 70,000+ 30,000 / 4 =
2,00,000 /4 = 50,000
P/L Suspense A/c = 50,000 x 3/6 x 5/12
= 25,000 x 5/12 = 2083.33 x 5 = 10416.65 = 10417
W:N 3 Goodwill
= Average Profit x No of Year Purchases =
50,000 x 2 = Rs. 1,00,000
Virendra’s Goodwill = 1,00,000 x 3/6 =
50,000
Practical Problems
| Q 5 | Page 204
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. (6 month)
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.
In the books of Firm..
Dr.
Revaluation A/c Cr.
|
Particulars |
Amount |
Particulars |
Amount |
|
To Stock To R.D.D. (10%) To Patents To Partner’s Capital A/c Sohan (3/6) 15,000 Rohan (2/6) 10,000 Mohan (1/6) 5,000 |
5,000 3,000 12,000 30,000 |
By Undervalued: Land & Building Machinery By Investments |
10,000 20,000 20,000 |
|
|
50,000 |
|
50,000 |
Dr.
Partner’s Capital A/c Cr.
|
Particulars |
Sohan |
Rohan |
Mohan |
Particulars |
Sohan |
Rohan |
Mohan |
|
By Drawing To Executor’s Loan A/c To Balance c/d |
63,500 |
25,000 49,000 |
34,500 |
By Balance b/d By General Reserve By Goodwill By P/L suspense A/c By Revaluation A/c (Profit) |
20,000 13,500 15,000 15,000 |
20,000 9,000 10,000 25,000 10,000 |
20,000 4,500 5,000 5,000 |
|
|
63,500 |
74,000 |
34,500 |
|
63,500 |
74,000 |
34,500 |
Sohan = 27,000 x 3/6 = 4500 x3 = 13,500
Rohan = 27,000 x 2/6 = 4500 x 2 = 9,000
Mohan = 27,000 x 1/6 = 4,500
WN 2 Undervalued land &
Building and Machinery
Land & Building
= 40,000 x 100/80 (100-20)% =
50000
Machinery
= 80,000 x 100/80 (100-20)% = 100000
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