OMTEX CLASSES: 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.

Book Keeping, Accountancy, 12th Std, HSC Accounts, Death of Partner,

Chapter 5, Reconstitution of Partnership (Death of Partner)

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 31st 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