Question

P, Q and R were partners in a firm, sharing profits in 2 : 2 : 1. The partnership deed provided that on the death of a partner, his executors will be entitled for the following.

1. Interest on capital @ 12% p.a.
2. Interest on drawings @ 18% p.a.
3. Salary Rs 12,000 p.a.
4. Share in the profit the firm (upto the date death) on the basis previous year’s profit.

P died on 31-05-2017. His capital was Rs 80,000 as on 31st March, 2017.
He had withdrawn Rs 15,000 and interest on his drawings was calculated as Rs 1,200. The profit of the firm for the previous year ended 31-03-2017 was Rs 30,000. Prepare P’s Capital Account to be presented to his executors.

Answer 1

Working Note:
Calculation of profit as under :
Profit of 2 month = 30,000 x \(\frac{2}{12}\) = Rs 5,000
P’s share of profit = 5,000 x \(\frac{2}{5}\) = Rs 2,000