Puneet, Pankaj and Pammy are partners in a business sharing profits and losses in the ratio of 2:2:1 respectively. Their Balance sheet as on March 31, 2016, was as follows:
Mr. Pam my died on September 30, 2017. The partnership deed provided the following:
1.The deceased partner will be entitled to his share of profit up to the date of death calculated on the basis of previous year’s profit.
2. He will be entitled to his share of goodwill of the firm calculated on the basis of
3 years’ purchase of average of last 4 years’ profit.
The profits for the last four financial years are given below:
for 2012-13; Rs.80,000;
for 2013-14, Rs. 50,000;
for 2014-15, Rs. 40,000;
for 2015-16, Rs. 30,000.
The drawings of the deceased partner up to the date of death amounted to Rs. 10,000. Interest on capital is to be allowed at 12% per annum. Surviving partners agreed that Rs. 15,400 should be paid to the executors immediately and the balance in four equal yearly instalments with interest at 12% p.a. on outstanding balance. Show Mr. Pammy’s Capital account, his Executor’s account till the settlement of the amount due.
