A, B and C carried on business in partnership, sharing profits and losses in the proportion of 3:2:1. Their capitals as per the Balance Sheet as at 31st March, 2015 were A-; Rs.30,000; B-Rs.20,000; C.-Rs.15,000 On 31st December, 2015 C died. You are instructed to prepare an account for presentation to his executors, having regard to the following facts:
a. Capital carried interest at 12% p.a.
b. C’s Drawings from 1st April, 2015 to the date of his death amounting to Rs.4,500.
c. C’s share of profits for the portion of the current financial year for which he lived was to be taken at the sum calculated on the average of the last three completed years.
d. Goodwill of the firm be valued on the basis of two years’ purchase of the average profit of last three completed years.
The annual profits of last three completed years were Rs.17,500; Rs.16,000 and Rs.19,000 respectively. Pass necessary Journal entries and show the account of the executors of C.
