OMTEX CLASSES: 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.

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

Chapter 5, Reconstitution of Partnership (Death of Partner)

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 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.

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