Question

Ram, Ravi, and Rohan were partners sharing profits in the ratio of 2:3:1. On 31\textsuperscript{st March, 2023, their Balance Sheet was as follows:} \begin{center} Balance Sheet of Ram, Ravi, and Rohan as on 31.3.2023 \end{center} \begin{center} \begin{tabular}{|p{8cm}|p{6cm}|} Liabilities & Amount (\rupee)
Creditors & 3,62,000
General Reserve & 18,000
Capitals: &
{0.5cm} Ram & 1,00,000
{0.5cm} Ravi & 2,00,000
{0.5cm} Rohan & 3,00,000
Total Liabilities & 9,80,000
Assets &
Cash & 14,000
Bank & 2,96,000
Stock & 80,000
Debtors & 3,00,000
Less: Provision for doubtful debts & (10,000)
Investments & 2,50,000
Land & 2,50,000
Total Assets & 9,80,000
\end{tabular} \end{center} Rohan died on 30\textsuperscript{th} September, 2023. On the death of a partner, the partnership deed provided for the following: Goodwill was to be valued at two years' purchase of the average profit of the last three years. The profits for the last three years were: 2020-21: \rupee45,000 2021-22: \rupee90,000 2022-23: \rupee1,35,000 Deceased partner’s share of profit till the date of his death will be calculated on the basis of the average profit of the last three years. Prepare Rohan’s Capital Account to be rendered to his executors.

Hint:

For deceased partner's accounts, calculate goodwill and profit up to the date of death carefully and distribute as per the agreed ratio.

Answer 1

1. Calculation of Goodwill: \[ \text{Average Profit} = \frac{\rupee45,000 + \rupee90,000 + \rupee1,35,000}{3} = \rupee90,000. \] \[ \text{Goodwill of the firm} = \text{Average Profit} \times 2 = \rupee90,000 \times 2 = \rupee1,80,000. \] \[ \text{Rohan’s Share of Goodwill} = \rupee1,80,000 \times \frac{1}{6} = \rupee30,000. \] 2. Deceased Partner’s Share of Profit: \[ \text{Profit till date of death (6 months)} = \rupee90,000 \times \frac{6}{12} = \rupee45,000. \] \[ \text{Rohan’s Share} = \rupee45,000 \times \frac{1}{6} = \rupee7,500. \] % Rohan's Capital Account \begin{center} Rohan’s Capital Account \end{center} \begin{center} \begin{tabular}{|p{8cm}|p{6cm}|} Particulars & Amount (\rupee)
To Executors A/c (Balancing Figure) & 3,37,500
By Balance b/d & 3,00,000
By General Reserve (1/6 share) & 3,000
By Goodwill (1/6 share) & 30,000
By Profit (up to date of death) & 7,500
Total & 3,37,500
\end{tabular} \end{center}