OMTEX CLASSES: Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition]

Select the most appropriate answer from the alternative given below and rewrite the sentence.

Write a word, term, phrase, which can substitute the following statement.

State whether the following statement is True or False with reason.

Fill in the blank and rewrite the following sentence.

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	5,000
		Rakesh	5,000
		Mahesh	5,000	15,000
	55,000			55,000

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 1^stJuly 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

Practical Problems | Q 2 | Page 202

Rahul, Rohit, and Ramesh are in a business sharing profits and losses in the ratio of 3:2:1 respectively. Their balance sheet as on 31st March 2017 was as follows.

Balance Sheet as on 31^st March 2017

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

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
2016-17	₹ 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

View Solution

In the books of the Partnership Firm Ramesh’s Capital Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Drawings A/c	30,000	By Balance b/d	2,40,000
To Interest on Drawings A/c	2,000	By Goodwill A/c	60,000
To Executor’s Loan A/c	3,41,000	By Salary A/c	30,000
		By Interest on Capital A/c	6,000
		By Profit and Loss Adjustment A/c – Profit	11,000
		By Profit and Loss Suspense A/c	10,000
		By General reserve A/c	16,000
	3,73,000		3,73,000

(4) Profit and Loss Adjustment Account

Particulars		Amount (₹)	Particulars	Amount (₹)
To Plant and Machinery A/c		5,000	By R.D.D. A/c	5,000
To Partners’ Capital A/cs :			By Investments A/c	60,000
Rahul	33,000		By Creditors A/c	6,000
Rohit	22,000
Ramesh	11,000	66,000
		71,000		71,000

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Practical Problems | Q 3 | Page 203

Ram, Madhav, and Keshav are partners sharing Profit and Losses in the ratio 5:3:2 respectively. Their Balance Sheet as on 31st March 2018 was as follows.

Balance Sheet as on 31^st 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 31July 2018 and the following Adjustment were agreed by as per partnership deed.

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.

Solution

In the books of the Partnership Firm Revaluation Account

Particulars		Amount (₹ )	Particulars	Amount (₹)
To R.D.D. A/c		10,000	By Loose Tools A/c	30,000
To Creditors A/c		10,000	By Live Stock A/c	20,000
To Partners’ capital A/c – Profit
Ram	15000	30,000
Madhav	9000
Keshav	6000
		50,000		50,000

Keshav’s Capital Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance c/d	92,000	By Balance b/d	50,000
		By General reserve A/c	5,000
		By Commission A/c (₹ 2,000 × 4 months)	8,000
		By Goodwill A/c	20,000
		By revaluation A/c – Profit	6,000
		By Profit and Loss Suspense A/c	3,000
	92,000		92,000

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Practical Problems | Q 4 | Page 204

Virendra, Devendra, and Narendra were partners sharing Profit and Losses in the ratio of 3:2:1. Their Balance Sheet as on 31st March 2019 was as follows.

Balance Sheet as on 31^stMarch 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 31^st 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.

1. The capital to his credit at the date of death.

2. His proportion of Reserve at the date of the last Balance sheet.

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 31^st 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. Virendras Executors A/c

Solution

In the books of the Partnership Firm Virendra’s Capital Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Drawings A/c (₹ 3,000 × 5 months)	15,000	By Balance b/d	90,000
To Executor’s Loan A/c	1,50,417	By Goodwill A/c	50,000
		By Profit and Loss Suspense A/c	10,417
		By reserve Fund A/c	15,000
	1,65,417		1,65,417

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

Practical Problems | Q 5 | Page 204

The Balance Sheet of Sohan, Rohan and Mohan who were sharing profits and Losses in the ratio of 3:2:1 as follows.

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 1^st October 2019 and the following adjustments were made.

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.

Solution

In the books of the Partnership firm Partners’ Capital Accounts

Particulars	Sohan (₹)	Rohan (₹)	Mohan (₹)	Particulars	Sohan (₹)	Rohan (₹)	Mohan (₹)
To Executor’s Loan A/c	-	49,000	-	By Balance b/d	20,000	20,000	20,000
To Drawings A/c	-	25,000	-	By revaluation A/c	15,000	10,000	5,000
To Balance c/d	63,500	-	34,500	By General reserve A/c	13,500	9,000	4,500
				By Goodwill A/c	15,000	10,000	5,000
				By Profit and Loss Suspense A/c		25,000
	63,500	74,000	34,500		63,500	74,000	34,500

Working Notes :

Revaluation Account

Particulars		Amount (₹)	Particulars	Amount (₹)
To Stock A/c		5,000	By Land and Building A/c	10,000
To R.D.D. A/c		3,000	By Machinery A/c	20,000
To Patents A/c		12,000	By Investments A/c	20,000
To Partner’s Capital A/cs – Profit
Sohan	15,000
Rohan	10,000
Mohan	15,000	30,000
		50,000		50,000

(2) Firm’s goodwill = ₹ 30,000. Distribute among partners in their profit and loss ratio 3 : 2 : 1.

Chapter 5 - Reconstitution of Partnership (Death of Partner) [Latest edition] Balbharati Solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board.

(5) Patents were valueless means it is loss for business.

(6) Rohan’s share in profit is ₹ 25,000 and his drawings is ₹ 25,000. Rohan is allowed to retain his drawings as his share of profit. Means write ₹ 25,000 as drawings on debit side and write ₹ 25,000 as Profit and Loss Suspense A/c on Credit side of Partners’ Capital A/c.

Book-keeping and Accountancy 12th Standard

HSC Maharashtra State Board. Latest Syllabus.

Chapter 1: Introduction to Partnership and Partnership Final Accounts

Chapter 2: Accounts of ‘Not for Profit’ Concerns

Chapter 3: Reconstitution of Partnership (Admission of Partner)

Chapter 4: Reconstitution of Partnership (Retirement of Partner)

Chapter 5: Reconstitution of Partnership (Death of Partner)

Chapter 6: Dissolution of Partnership Firm

Chapter 7: Bills of Exchange

Chapter 8: Company Accounts - Issue of Shares

Chapter 9: Analysis of Financial Statements

Chapter 10: Computer In Accounting