Question

Azhar, Sumit, and Robit were partners in a firm sharing profits and losses in the ratio \(3 : 1 : 1\). Their Balance Sheet as at 31st March, 2023 was as follows: \[ \begin{array}{|l|r|l|r|} \hline Liabilities & Amount (\rupee) & Assets & Amount (\rupee)
\hline \text{Creditors} & 90,000 & \text{Bank} & 20,000
\text{General Reserve} & 60,000 & \text{Stock} & 40,000
\text{Capitals:} & & \text{Debtors} & 1,50,000
\quad \text{Azhar} & 60,000 & \text{Fixed Assets} & 60,000
\quad \text{Sumit} & 40,000 & &
\quad \text{Robit} & 20,000 & &
\hline Total & 2,70,000 & Total & 2,70,000
\hline \end{array} \] Robit died on 30th June, 2023. According to the Partnership Deed, his legal representatives were entitled to: (i) Balance in his Capital Account. (ii) His share of General Reserve. (iii) Interest on capital @10\% p.a. (iv) His share of goodwill (based on thrice the average of the past four years’ profits). (v) His share in profits up to the date of death (based on the profit of the last year). Profits for the previous four years: \[ \text{2019–20: (\rupee3,000)}, \quad \text{2020–21: \rupee28,000}, \quad \text{2021–22: \rupee16,000}, \quad \text{2022–23: \rupee15,000}. \] \vspace{0.5cm}

Hint:

While preparing a deceased partner’s capital account, include all entitlements like capital balance, reserves, interest on capital, goodwill, and share of profit up to the date of death.

Answer 1

Step 1: Calculation of Entitlements for Robit 1. Balance in Capital Account: \rupee20,000 (as given). 2. Share of General Reserve: \[ \text{Robit’s Share} = \frac{1}{5} \times 60,000 = \rupee12,000. \] 3. Interest on Capital: \[ \text{Interest} = \rupee20,000 \times \frac{10}{100} \times \frac{3}{12} = \rupee500. \] 4. Goodwill: \[ \text{Average Profit} = \frac{(\rupee3,000) + \rupee28,000 + \rupee16,000 + \rupee15,000}{4} = \rupee14,000. \] \[ \text{Goodwill of the Firm} = \rupee14,000 \times 3 = \rupee42,000. \] \[ \text{Robit’s Share of Goodwill} = \frac{1}{5} \times \rupee42,000 = \rupee8,400. \] 5. Share in Profit up to the Date of Death: \[ \text{Profit for 2023} = \rupee15,000 \times \frac{3}{12} = \rupee3,750. \] \[ \text{Robit’s Share} = \frac{1}{5} \times \rupee3,750 = \rupee750. \] \vspace{0.5cm} Step 2: Robit’s Capital Account \[ \text{Robit’s Capital Account} \] \[ \begin{array}{|l|l|r|} \hline Date & Particulars & Amount (\rupee)
\hline \text{2023-06-30} & To Bank A/c (Paid to Legal Representatives) & 41,650
\hline & By Balance b/d & 20,000
& By General Reserve & 12,000
& By Interest on Capital & 500
& By Goodwill & 8,400
& By Profit (Up to Date of Death) & 750
\hline Total & & 41,650
\hline \end{array} \]