Simar, Tanvi, and Umara were partners in a firm sharing profits and losses in the ratio of 5 : 6 : 9. On 31st March, 2024, their Balance Sheet was as follows:
Balance Sheet of Simar, Tanvi, and Umara as at 31st March, 2024 Liabilities Amount (₹) Assets Amount (₹) Capitals: Fixed Assets 25,00,000 Simar 13,00,000 Stock 10,00,000 Tanvi 12,00,000 Debtors 8,00,000 Umara 14,00,000 Cash 7,00,000 General Reserve 7,00,000 Profit and Loss A/c 2,00,000 Trade Payables 6,00,000 Total 52,00,000 Total 52,00,000
Umara died on 30th June, 2024. The partnership deed provided for the following on the death of a partner:
Goodwill of the firm be valued at 3 years purchase of average profits for the last 5 years. The profits/losses for the previous four years were:2022-23: ₹ 3,10,000 (loss) 2021-22: ₹ 3,00,000 (profit) 2020-21: ₹ 4,00,000 (profit) 2019-20: ₹ 2,50,000 (profit) Umara’s share of profit or loss till the date of her death was to be calculated on the basis of profit or loss for the year ended 31st March 2024. Calculate Goodwill of the firm. Pass the necessary journal entry for the treatment of goodwill on Umara’s death. Calculate Umara’s share in the profit or loss of the firm till the date of her death. Pass the necessary journal entry to record Umara’s share of profit or loss till the date of her death.