Use app×
Join Bloom Tuition
One on One Online Tuition
JEE MAIN 2025 Foundation Course
NEET 2025 Foundation Course
CLASS 12 FOUNDATION COURSE
CLASS 10 FOUNDATION COURSE
CLASS 9 FOUNDATION COURSE
CLASS 8 FOUNDATION COURSE
0 votes
4.0k views
in Accounts by (49.1k points)
closed by

Sonu, Maneka and Karina were partners sharing profits and losses in the ratio 2:2:1 respectively. Their balance Sheet as on 31st March 2018 was as follows.

Adjustment:

Karina died on 1st Oct 2018 and the adjustment were agreed as per the deed as follows.

1. Plant & Machinery to be valued at ₹60,000 and all Debtors were good.

2. Stock of Goods to be reduced by ₹3, 000

3. The drawings of Karina up to the date of her death amounted to ₹400 per month.

4. Interest on capital was to be allowed at 10% p.a.

5 The deceased partners share of Goodwill is to be valued at 2 years purchased of average profit for last 3 years. The profits were

2015-16 - ₹15,000

2016-17 - ₹17,000

2017-18 - ₹13,000

6. The deceased partners share of profit up to the date of her death should be based on average profit of last two years.

Prepare: Profit & Loss Adjustment A/c , Karina’s capital A/c showing the balance payable to her executors loan account. Working Note for share of Goodwill and Profit up to the date of death.

1 Answer

+1 vote
by (48.0k points)
selected by
 
Best answer

Working notes:-

1. Calculation of Goodwill

a. Average Profit = Total Profit / No. of Years

\(\frac{45,000}3\)

= ₹15,000

b. Goodwill of the Firm = Average Profit × No. of Year Purchases

= ₹15,000 × 2 

= ₹30,000

c. Share of Goodwill to Karina = Goodwill of the firm × Her share

= ₹30,000 × \(\frac 15\)

= ₹6,000

2. Calculation of share of the Profit of Karina

a. Average Profit = Total Profit / No. of Years

\( \frac{17,000+13,000}2\)

\(\frac{30,000}2\)

= ₹15,000

b. Share of Profit to Karina = Average Profit × Profit Sharing Ratio × Period

= 15,000 × \(\frac 15\) × \(\frac 6{12}\)

= ₹1,500

Welcome to Sarthaks eConnect: A unique platform where students can interact with teachers/experts/students to get solutions to their queries. Students (upto class 10+2) preparing for All Government Exams, CBSE Board Exam, ICSE Board Exam, State Board Exam, JEE (Mains+Advance) and NEET can ask questions from any subject and get quick answers by subject teachers/ experts/mentors/students.

Categories

...