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.