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Question -

Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their Balance Sheet as on March 31, 2016 stood as follows:

Books of Arti, Bharti and Seema 

Balance Sheet as on March 31, 2016

 

 

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

12,000

Buildings

21,000

Creditors

14,000

Cash in Hand

12,000

General Reserve

12,000

Bank

13,700

Capitals:

 

Debtors

12,000

Arti 20,000

 

Bills Receivable

4,300

Bharti

12,000

 

Stock

1,750

Seema

8,000

40,000

Investment

13,250

 

78,000

 

78,000

 

 

 

 

 

 

 

 

 

 
Bharti died on June 12, 2016 and according to the deed of the said partnership, her executors are entitled to be paid as under:
(a) The capital to her credit at the time of her death and interest thereon @ 10% per annum.
(b) Her proportionate share of reserve fund.
(c) Her share of profits for the intervening period will be based on the sales during that period, which were calculated as Rs 1,00,000. The rate of profit during past three years had been 10% on sales.
(d) Goodwill according to her share of profit to be calculated by taking twice the amount of the average profit of the last three years less 20%. The profits of the previous years were:
2013 – Rs 8,200
2014 – Rs 9,000
2015 – Rs 9,800
The investments were sold for Rs 16,200 and her executors were paid out. Pass the necessary journal entries and write the account of the executors of Bharti.



Answer -


 Books of Arti and Seema 

Journal

 

Date

Particulars

L.F.

Amount

Rs

Amount

Rs

2016

 

 

 

 

 

June 12

Interest on Capital A/c

Dr.

 

240

 

 

General Reserve A/c

Dr.

 

4,000

 

 

Profit and Loss (Suspense) A/c

Dr.

 

3,333

 

 

To Bharti’s Capital A/c

 

 

 

7,573

 

(Profit, interest and general reserve are in credited to

Bharti’s Capital account)

 

 

 

 

 

 

 

 

 

 

June 12

Arti’s Capital A/c

Dr.

 

3,600

 

 

Seema’s Capital A/c

Dr.

 

1,200

 

 

To Bharti’s Capital A/c

 

 

 

4,800

 

(Bharti’s share of goodwill adjusted to Arti’s and

Seema’s Capital Account in their gaining ratio, 3:1)

 

 

 

 

 

 

 

 

 

June 12

Bharti’s Capital A/c

Dr.

 

24,373

 

 

To Bharti’s Executor’s A/c

 

 

 

24,373

 

(Bharti’s capital account is transferred to her executor’s

account)

 

 

 

 

 

 

 

 

 

 

June 12

Bank A/c

Dr.

 

16,200

 

 

To Investment A/c

 

 

 

13,250

 

To Profit on Sale of Investment

 

 

 

2,950

 

(Investment sold)

 

 

 

 

 

 

 

 

 

 

 

June 12

Bharti’s Executor A/c

Dr.

 

24,373

 

 

To Bank A/c

 

 

 

24,373

 

(Bharti Executor paid)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bharti’s Capital Account

 

Dr.

Cr.

 

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2016

 

 

 

2016

 

 

 

June 12

Bharti's Executor’s A/c

 

24,373

Mar. 31

Balance b/d

 

12,000

 

 

 

 

June 12

Interest on Capital

 

240

 

 

 

 

 

Profit and Loss (Suspense)

 

3,333

 

 

 

 

 

General Reserve

 

4,000

 

 

 

 

 

Arti’s Capital A/c

 

3,600

 

 

 

 

 

Seema’s Capital A/c

 

1,200

 

 

 

24,373

 

 

 

24,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bharti’s Executor’s Account 

 

Dr.

Cr.

 

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2016

 

 

 

2016

 

 

 

June 12

Bank

 

24,373

June 12

Bharti's Capital A/c

 

24,373

 

 

 

 

 

 

 

 

 

 

 

24,373

 

 

 

24,373

 

 

 

 

 

 

 

 


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