Unlocking the Secrets: iPhone 16 Series Revealed! AI, New Buttons, and Big Displays Unveiled! Are you eagerly awaiting the next big release from Apple? Brace yourself for the iPhone 16 series, where innovation meets anticipation. In this article, we'll delve into all the exciting details and leaks surrounding this highly anticipated release. AI Integration One of the most buzzed-about features of the iPhone 16 series is its enhanced AI capabilities. With advanced algorithms and machine learning, these phones promise to deliver a smarter, more intuitive user experience. From personalized recommendations to seamless voice commands, get ready to interact with your device like never before. New Button Dynamics Say goodbye to the conventional button layout! The iPhone 16 series is rumored to introduce a new button configuration that enhances functionality and usability. With the addition of an action button, users can expect quicker access to their favorite features and applications, m
Death of A Partner Ts grewal solution volume-1(2023-2024)
Question 1:
A, B and C were partners sharing profits in the ratio of 1/2, 2/5 and 1/10. Find the new ratio of the remaining partners if C dies.
Answer:
Old Ratio (A, B and C) =1/2 :2/5 : 1/10 or 5 : 4 : 1
As we can see, no information is given as to how A and B are acquiring C's profit share after his death, so the new profit sharing ratio between A and B is calculated just by crossing out the C’s share. That is, the new ratio becomes 5 : 4.
∴ New Profit Ratio (A and B) = 5 : 4
Question 2:
From the following particulars, calculate new profit-sharing ratio of the partners:
(a) Shiv, Mohan and Hari were partners in a firm sharing profits in the ratio of 5 : 5 : 4. Mohan died and his share was taken equally between Shiv and Hari.
(b) P, Q and R were partners sharing profits in the ratio of 5 : 4 : 1. P died from.
Answer:
(a)
Old Ratio (Shiv, Mohan and Hari) = 5 : 5 : 4
Mohan’s Profit Share = 5/14
His share is divided between Shiv and Hari equally i.e. in the ratio of 1: 1
Share of mohan taken by shiv=5/14×1/2=5/28
Share of mohan taken by Hari=5/14×1/2=5/28
New Profit Share = Old Profit Share + Share taken from Mohan
Shiv’s new share=5/14+5/28=10+5/28=15/28
Hari’s new share=4/14+5/28=8+5/28=13/28
∴ New Profit Ratio (Shiv and Hari) = 15: 13
(b)
Old Ratio (P, Q and R) = 5: 4: 1
P’s Profit Share = 5/10
As we can see, no information is given as to how Q and R are acquiring P's profit share after his death, so the new profit sharing ratio between Q and R is calculated just by crossing out the P’s share. That is, the new ratio becomes 4 : 1
∴New Profit Ratio (Q and R) = 4: 1
Question 3:
R, S and M are partners sharing profits in the ratio of 2/5, 2/5 and 1/5. M died and his share is taken by R and S in the ratio of 1 : 2. Calculate the new profit-sharing ratio.
Answer:
Old Ratio (R, S and M) = 2: 2 : 1
M retires from the firm.
His profit share = 1/5
M’s share taken by R and S in ratio of 1 : 2
Share taken by R: 1/5×1/3=1/15
Share taken by S: 1/5×2/3=215
New Ratio = Old Ratio + Share acquired from M
R's New Share: 2/5+1/15=6+1/15=7/15
S's New Share: 2/5+2/15=6+2/15=8/15
∴ New Profit Ratio (R and S) = 7 : 8
Question 4:
A, B and C were partners sharing profits in the ratio of 4 : 3 : 2. A died, B and C will share profits in the ratio of 2 : 1. Determine the gaining ratio.
Answer:
Old Ratio (A, B and C) = 4 : 3 : 2
New Ratio (B and C) = 2 : 1
Gaining Ratio=New Ratio − Old Ratio
B’s gain=2/3-3/9=6-3/9=3/9
C’s gain=1/3-2/9=3-2/9=1/9
∴Gaining Ratio = 3: 1
Question 5:
(a) W, X, Y and Z are partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively. Y died and W, X and Z decide to share the profits and losses equally in future.
Calculate gaining ratio.
(b) A, B and C are partners sharing profits and losses in the ratio of 4: 3: 2. C died. A is acquiring 4/9 of C's share and balance is acquired by B. Calculate the new profit-sharing ratio and gaining ratio.
Answer:
(a)
Old Ratio (W, X, Y and Z) = of 1/3;1/6: 1/3;1/6 or 2 : 1 : 2 : 1
New Ratio (W, X and Z) = 1 : 1 : 1
Gaining Ratio = New Ratio − Old Ratio
W's Gain=1/3-2/6=2-2/6=0/6
X's Gain=1/3-1/6=2-1/6=1/6
Z's Gain=1/3-1/6=2-1/6=1/6
∴Gaining Ratio = 0: 1: 1
(b)
Old Ratio (A, B and C) = 4: 3: 2
C’s Profit Share =2/9
A acquires 4/9 of C’s Share and remaining share is acquired by B.
Share acquired by A=2/9×4/9=8/81
Share acquired by B=C’s share- Share acquired by A=2/9-8/81=10/81
New Profit Share = Old Profit Share + Share acquired from C
A’s new share=4/9+8/81=36+8/81=44/81
B’s new share=3/9+10/81=27+10/81=37/81
New Profit Ratio A and B = 44: 37
Gaining Ratio = New Ratio − Old Ratio
A's Gain=44/81-4/9=44-36/81=8/81
B's Gain=37/81-3/9=37-27/81=10/81
∴Gaining Ratio = 8: 10 or 4: 5
Question 6:
Keshv, Nirmal, and Pankaj are partners sharing profits in the ratio of 5: 3: 2. Pankaj died and his share is taken by Keshv. Calculate new profit-sharing ratio of Keshv and Nirmal.
Answer:
Old Ratio (Keshv, Nirmal, and Pankaj) = 5: 3: 2
Pankaj died from the firm.
His profit share = 210
Pankaj’s share is taken by Keshv in entirety
New Ratio = Old Ratio + Share acquired from Pankaj
Keshv 's New Share: 5/10+2/10=7/10
Nirmal 's New Share: 3/10+0=310
∴ New Profit Ratio (Keshv and Nirmal) = 7: 3
Question 7:
X, Y and Z were partners in a firm sharing profit in 3 : 2 : 1. The firm closes its books on 31st March every year. Y died on 30th June, 2021. On Y's death goodwill of the firm was valued at ` 60,000. Y's share in the profit of the firm till the date of his death was to be calculated on the basis of previous year's profit which was ` 1,50,000.
Pass necessary Journal entries for goodwill and Y's share of profit at the time of his death.
Answer:
Working Notes:
WN 1: Calculation of Y's Share of Goodwill
Goodwill of the Firm= ` 60,000
Y's Share of Goodwill = 60,000 × 2/6 = ` 20,000
20,000 will be debited to X's & Z's Capital A/c in gaining ratio of 3 : 1
X will pay = 20,000 × 3/4 = ` 15,000
Z will pay = 20,000 × 1/4 = ` 5,000
WN 2: Calculation of Y's Share of Profit
Previous Year's Profit = ` 1,50,000
Y's share of Profit (till death) = Previous Year's Profit × Y's Profit Share × 3 months (April 01, 2021 till June 30, 2021)
Y's share of Profit (till death) = 1,50,000 × 2/6 × 3/12= ` 12,500
Question 8:
A, B and C were partners sharing profits in the ratio of 3 : 2 : 1. The firm closes its books on 31st March every year. B died on 30th June, 2020. On his death, Goodwill of the firm was valued at ` 6,00,000. B's share in profit or loss till the date of death was to be calculated on the basis of previous year's profit which was ` 15,00,000 (Loss). Pass necessary Journal entries for goodwill and his share of loss.
Answer:
Working Notes:
1. Calculation of B’s Share of Goodwill
2. Calculation of B’s Share of Loss till the date of his death i.e. 30th June, 2020
Question 9:
P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in the Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profit credited to his account during the last four completed years.
R died on 1st January, 2021. The firm's profits for the last four years ended 31st December, were as:
2017 − ` 1,20,000; 2018 − ` 80,000; 2019 − ` 40,000; 2020 − ` 80,000.
(a) Determine the amount that should be credited to R in respect of his share of Goodwill.
(b) Pass Journal entry without raising Goodwill Account for its adjustment.
Answer:
Calculation of R’s Share of Goodwill
Profit credited to R’s Capital Account in 4 years = Net profit for last four years × R’s Share
=1,20,000+80,000+80,000+4,000×3/8
=3,20,000×3/8=1,20,000
(b)
Working Notes:
R’s Share of Goodwill = ` 60,000
Old Ratio (P, R and S) = 4 : 3 : 1
R died.
∴ Gaining Ratio = 4 : 1
This share of goodwill is to be distributed between P and S in their gaining ratio (i.e. 4 : 1)
p’s Share of Goodwill = 60,000×4/5=48,000
S’s share of Goodwill =60,000 ×1/5=12,000
Question 10: Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of 3 :2:1. Navita died on 30th June, 2017. Her share of profit for the intervening period was based on the sales during that period, which were ` 6,00,000. The rate of profit during the past four years had been 10% on sales. The firm closes its books on 31st March every year.
Calculate Navita’s share of profit. (CBSE 2019)
Answer:
Sales during that period of the firm from 1st April, 2017 to 30th June, 2017 ` 6,00,000
The rate of profit during the past four years had been 10% on sales
Profit of the firm from 1st April, 2017 to 30th June, 2017 is ` 6,00,000 × 10/100 = ` 60,000
Share of Profit is ` 60,000 × 2/6 = ` 20,000
Question 11: Anil, Sunil and Hari were partners sharing profits equally. Sunil died on 31st December, 2020. In terms of the partnership deed, accounts were prepared for the period ended 31st December, 2020 and net profit was determined at `6,00,000. Pass the Journal entry for the profit share of the partners.
Answer:
Working Notes:
Share of each partner is Equal (1:1:1)
Share of each partner = 6,00,000 × 1/3 = 2,00,000
Question 12:
A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 25th February, 2019, B died. B’s share of profit till the date of his death was calculated at ` 5,000. Pass the necessary Journal entry for the same in the books of the firm. (CBSE 2020)
Answer:
Question 13:
A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. B died on 30th June, 2021. For the year ended 31st March, 2022, proportionate profit of 2021 is to be taken into consideration. During the year ended 31st March, 2022, bad debts of ` 2,000 had to be adjusted. Profit for the year ended 31st March, 2021 was `14,000 before adjustment of bad debts. Calculate B's share of profit till the date of his death.
Answer:
Profit for the year 2020-21 before adjusting bad debts = ` 14,000
Bad debts = ` 2,000
Profits after adjusting bad debts =14,000 – 2,000= `.12,000
Proportionate profit of the firm (from April 01, 2021 to June 30, 2022)
=12,000×3/12=3,000
B’s share of profit (from April 01, 2021 to June 30, 2022)=
=3,000×2/6=1,000
Question 14: Ram, Manu and Hari were partners in a firm. Hari died on 30th June, 2022. His share of profit from the closure of the last accounting year till the date of death was to be calculated on the basis of the average of three completed financial years of profits before death. Profits for the years ended 31st March, 2020, 2021 and 2022 were ` 1,10,000; ` 1,20,000 and ` 1,30,000 respectively. Calculate Hari’s share of profit till the date of his death and pass necessary Journal entry for the same.
Answer:
Total profit previous three years = 1,10,000 + 1,20,000 + 1,30,000 = 3,60,000
Average Profit previous three years = 3,60,000/3 = 1,20,000
Hari died on 30th June, 2022 after 3 month of beginning of the year (from 1 April 2021 to 30th June, 2022)
Hari’s share of Profit for 3 month = 1,20,000 × 3 × 1 ÷ 12 × 3 = ` 10,000
Question 15:
X, Y and Z were partners sharing profits and losses in the ratio of 3 : 2 : 1. Y died on 30th June, 2022. Profit from 1st April, 2022 to 30th June, 2022 was ` 3,60,000. X and Z decided to share the future profits in the ratio of 3 : 2 respectively with effect from 1st July, 2021. Pass the necessary Journal entries to record Y's share of profit up to the date of death.
Answer:
Working Notes:
WN1: Calculation of Y’s Share of Profit
Y's share=Firm's Profit×Y's Profit Share
Y's share=3,60,000×2/6=1,20,000 to be borne by gaining partners in gaining ratio
WN2: Calculation of Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
X's gain=3/5−3/6=3/30
Z's gain=2/5−1/6=7/30
Gaining Ratio=3:7
X's share=1,20,000×3/10=36,000
Z's share=1,20,000×7/10=84,000
Question 16: Radha, lina and Reeta were partners sharing profits equally. Reeta died on 31st July, 2022. Radha and Tina decided to continue the business. Share of profit or loss of the deceased partner from the beginning of the year up to the date of death was to be determined on the basis of last year’s profit, which was 4,50,000.
Pass necessary Journal entry to record Reeta’s share of profit/loss up to the date of death.
Answer:
Working Notes:
Hadha, lina and Reeta were partners sharing profits equally (1:1:1)
Reeta died on 31st July, 2022 after 4 month of beginning of the year (from 1 April 2022 to 31st July, 2022)
Last year’s profit = ` 4,50,000
Reeta’s share of Profit for 3 month = 4,50,000 × 4 × 1 ÷ 12 × 3 = ` 50,000
Question 17: Manoj, Rakesh and Harsh were partners sharing profits in the ratio of 2:2:1. Manoj died on 30th June, 2022. Rakesh and Harsh decided to continue the business. Share of profit or loss of the deceased partner from the beginning of the year up to the date of death was to be determined on the basis of last year’s profit. Last year’s loss was ` 2,00,000.
Pass necessary Journal entry to record Manoj’s share of profit/loss up to the date of death
Answer:
Working Notes:
Manoj, Rakesh and Harsh were partners sharing profits (2:2:1)
Manoj died on 30th June, 2022 after 3 month of beginning of the year (from 1 April 2021 to 31st June, 2022)
Last year’s loss = ` 2,00,000
Reeta’s share of Loss for 3 month = 2,00,000 × 3 × 2 ÷ 12 × 5 = ` 20,000
Question 18:
X, Y and Z were partners in a firm. Z died on 31st May, 2021. His share of profit from the closure of the last accounting year till the date of death was to be calculated on the basis of the average of three completed years of before death. Profits for the year ended 31st March, 2019, 2020 and 2021 were `18,000, ` 19,000 and ` 17,000 respectively.
Calculate Z's share of profit till his death and pass necessary Journal entry for the same when:
(a) there is no change in profit-sharing ratio of remaining partners, and
(b) there is change in profit-sharing ratio of remaining partners, new ratio being 3 : 2.
Answer:
Working Notes:
WN1: Calculation of Z’s Share of Profit
Z's share=Firm's Average Profit×Z's Profit Share×Period for which Z remained in the business
Average Profits=Total Profits Number of Years=18,000+19,000+17,000/3=54,000/3=` 18,000
Z's share=18,000×13×2/12=1,000 to be borne by gaining partners in gaining ratio in case b
WN2: Calculation of Gaining Ratio
Gaining Ratio = New Ratio − Old Ratio
X's gain=3/5−1/3=415
Y's gain=2/5−1/3=115
Gaining Ratio=4:1
X's share=18,000×4/5=800
Y's share=18,000×1/5=200
Question 19: A, B and C were partners sharing profits and losses in the ratio of 2: 2:1. C died on 30th June, 2021. Profit and Sales for the year ended 31st March, 2021 were ` 1,00,000 and ` 10,00,000 respectively. Sales during April to June, 2021 were ` 1,50,000. You are required to calculate share of profit of C till the date of his death.
Answer:
A, B and C were partners sharing profits (2:2:1)
C died on 30th June, 2021 after 3 month of beginning of the year (from 1 April 2021 to 31st June, 2021)
Profit for the year ended 31st March, 2020 were ` 1,00,000
Sales for the year ended 31st March, 2020 were ` 10,00,000
Percentage of Profit ended 31st March, 2020 were 10,00,000 × 100 ÷ 1,00,000 = 10 %
Sales during April to June, 2021 were ` 1,50,000
Profit from April to June, 2021 were ` 1,50,000 × 10 ÷ 100 = 15,000
C’s share of Loss for 3 month = 15,000 × 1 ÷ 5 = ` 3,000
Question 20: Ajay, Bhawna and Shreya were partners sharing profits in the ratio of 2:2:1. On 1st July, 2021 Shreya died. The books of accounts are closed on 31st March every year. Sales for the year 2020-21 ` 5,00,000 and that from 1st April to 30th June, 2021 were ` 1,40,000. Rate of profit during the past three years had been 10% on sales. Since Shreya’s legal representative was her only son, who is specially abled, it was decided that the profit for the purpose of settling Shreya’s account is to be calculated as 20% on sales.
Calculate Shreya’s share of profits till the date of her death and pass necessary Journal entry for the same.
(CBSE 2018 C, Modified)
Answer:
Ajay, Bhawna and Shreya were partners sharing profits in the ratio of 2:2:1
On 1st July, 2021 Shreya died
Shreya’s share of Profit On sale from 1st April, 2021 to 30th June, 2021 for 3 Month is to be calculated as 20% on sales
Sales from 1st April to 30th June, 2021 were `1,40,000 for 3 Month
Profit from 1st April to 30th June, 2021 (for 3 Month) were `1,40,000×20÷100=28,000
Shreya’s share of Profit =`28,000×1÷5=5,600
Question 21: Raman, Param and Karan were partners sharing profits and losses in the ratio of 3:2:1. Param died on 31st December, 2021. Accounts of the firm are closed on 31st March every year. Sales for the year ended 31st March, 2021 was ` 12,00,000 and sales for the nine months ended 31st December, 2021 was ` 6,00,000.
Loss for the year ended 31st March, 2021 was ` 90,000. Calculate deceased partner’s share of profit/loss from the beginning of the accounting year up to 31st December, 2021.
Answer:
Working Notes:
Sales for the year ended 31st March, 2021 was ` 12,00,000
Loss for the year ended 31st March, 2021 was ` 90,000
Percentage of Loss for the year ended 31st March, 2021 was 90,000 × 100 ÷ 12,00,000 = 7.5 %
Sales for the nine months ended 31st December, 2021 was ` 6,00,000.
Param’s share of Loss for the nine months ended 31st December, 2021 was ` 6,00,000 × 7.5 ÷ 100 = 15,000
Question 22: Akhil, Bikram and Charu were partners sharing profits and losses in the ratio of 3:2:1. Bikram died on 30th September, 2021. Loss from the beginning of the accounting year till the date of death was estimated at ` 3,60,000. Akhil and Charu decided to share future profits in the ratio of 3:2 w.e.f. 1st October, 2021.
Pass the necessary Journal entry to record Bhuwan’s share of profit/loss up to the date of death.
Answer:
Working notes:
WN-1
Loss from the beginning of the accounting year till the date of death was estimated at ` 3,60,000
Bikram’s Share of Loss till the beginning of the accounting year till the date of death ` 3,60,000 × 2/6 = 1,20,000
WN-2
Old share of Akhil is 3/6 and Charu is 1/6
Akhil and Charu New share future profits in the ratio of 3:2 w.e.f. 1st October, 2021.
Akhil = 3/6 - 3/5= 15-18/30=-3/30 (Gain)
Charu = 1/6 - 2/5= 5-12/30= -7/30 (Gain)
Gaining ratio of Akhil and Charu is 3:7
Akhinl = 1,20,000 × 3/10 = 36,000
Charu = 1,20,000 × 7/10 = 84,000
Question 23:
X, Y and Z were partners in a firm sharing profits in the ratio of 4 : 3 : 1. The firm closes its books on 31st March every year. On 1st February, 2021, Y died and it was decided that the new profit-sharing ratio between X and Z will be equal. Partnership Deed provided for the following on the death of a partner:
(a) His share of goodwill be calculated on the basis of half of the profits credited to his account during the previous four completed years. The firm's profits for the last four years were:
(b) His share of profit in the year of his death was to be computed on the basis of average profit of past two years.
Pass necessary Journal entries relating to goodwill and profit to be transferred to Y's Capital Account.
Answer:
Working Notes:
WN1: Calculation of Gaining Ratio
X :Y :Z=4:3:1(Old ratio)
X :Z=1:1(New ratio)
Gaining Ratio = New Ratio - Old Ratio
X's Gain=1/2−4/8=4−4/8=0
Z's Gain=1/2−1/8=4−1/8=3/8
X:Z=0:3
WN2: Calculation of Retiring Partner’s Share of Goodwill
Y's share of goodwill=4,00,000×3/8×1/2=` 75,000
Y's share of goodwill will be brought by Z only.
WN3: Calculation of Retiring Partner’s Share of Profit
Y's share of profit=75,000×3/8×10/12=` 23,438
Average profit for last two years=` 75,000
Question 24:
Iqbal and Kapoor are in partnership sharing profits and losses in 3 : 2. Kapoor died three months after the date of the last Balance Sheet. According to the Partnership Deed, the legal heir is entitled to the following:
(a) His capital as per the last Balance Sheet.
(b) Interest on above capital @ 3% p.a. till the date of death.
(c) His share of profits till the date of death calculated on the basis of last year's profits.
His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period.
The net profits for the last three years, after charging insurance premium, were ` 20,000; ` 25,000 and ` 30,000 respectively. Kapoor's capital as per Balance Sheet was ` 40,000 and his drawings till the date of death were ` 5,000.
Draw Kapoor's Capital Account to be rendered to his representatives.
Answer:
Working Notes
WN1 Calculation of Interest on Capita of Kapoor till date of his death
WN2 Calculation of Share of Profit of Kapoor till date of his death
WN3 Calculation of Interest on Drawings
Question 25: Karim, Saleem and Raheem were partners in a firm sharing profits and losses in the ratio of 3:4:3. The firm closes its books on 31st March every year. On 1st October, 2019, Karim died. On Karim’s death, the goodwill of the firm was valued at ` 3,50,000. Karim’s share in the profits of the firm in the year of his death was to be calculated on the basis of average profits of last four years. The profits for the last four years were 2015-16- ` 1,70,000; 2016-17- ` 1,30,000;2017-18- ` 1,90,000 and 2018-19- ` 1,10,000.The total amount payable to Karim’s executors on his death was ` 7,35,000. It was paid on 15th October, 2019.
Pass necessary Journal entries for the above transactions in the books of the firm. (CBSE 2020)
Answer:
Working notes:
WN-1 Calculation of goodwill
The goodwill of the firm was valued at ` 3,50,000
Karim’s Share of Goodwill = 3,50,000×3/10 = ` 1,05,000
Goodwill Share of Karim is in Goodwill will be compensated by Saleem and Raheem in 4:3
Saleem = 1,05,000× 4/7 = 60,000
Raheem = 1,05,000× 3/7 = 45,000
WN-2 Karim’s share of Profit till the date of death
The average profits = 1,70,000+1,30,000+1,90,000 +1,10,000/4=1,50,000
Karim’s share of Profit = ` 1,50,000×3×6/10×12=22,500
Question 26: The Balance sheet of Sadhu, Raja and Karan who were sharing profits in the ratio of 4:2:4 as at 31st March, 2021 was as follows:
Sadhu died on 31st July, 2021. The Partnership Deed provided for the following on the death of a partner:
(i) Goodwill of the firm be valued at two years’s purchase of average profits for the last three years.
(ii) Sadhu’s share of profit or loss till the date of his death was to be calculated on the basis of sales. Sales for the year ended 31st March, 2021 amounted to ` 4,50,000 and that from 1st April to 31st July, 2021 ` 2,70,000. The profit for the year ended 31st March, 2021 was calculated as ` 1,25,000.
(iii) Interest on capital was to be provided @ 5% p.a.
(iv) The average profits of the last three years were ` 55,000.
Prepare Sadhu’s Capital Account to be rendered to his executor. (Delhi 2013, Modified)
Answer:
Working notes:
WN-1 Calculation of goodwill
The average profits of the last three years were ` 55,000
Goodwill of the Firm = ` 55,000×2=1,10,000
Share of Sadhu is in Goodwill = 1,10,000 × 4/10 = 44,000
Goodwill Share of Sadhu is in Goodwill will be compensated by Raja and Karan in 2:4
Raja = 44,000 × 2/6 = 14,667
Karan = 44,000 × 4/6 = 29,333
WN-2 Interest on capital was to be provided @ 5% p.a.
Sadhu’s Interest on Capital = 80,000×5×4/100×12= 1,333
WN-3 Calculation of Sadhu’s share of Profit
Sales for the year ended 31st March, 2021 = ` 4,50,000
The profit for the year ended 31st March, 2021 = ` 1,25,000.
Percentage of Profit for the year ended 31st March, 2021 = 1,25,000×100/4,50,000= 28%
Sales from 1st April to 31st July, 2021 = ` 2,70,000
Profit from 1st April to 31st July, 2021 = ` 2,70,000×28/100= ` 75,600
Sadhu’s Share of Profit = 75,600×28×4/100×10 = ` 8,467
Question 27:
X and Y are partners. The Partnership Deed provides inter alia:
(a) That the Accounts be balanced on 31st March every year.
(b) That the profits be divided as: X one-half, Y one-third and carried to a Reserve one-sixth.
(c) That in the event of the death of a partner, his Executors be entitled to be paid:
(i) The Capital to his credit till the date of death.
(ii) His proportion of profits till the date of death based on the average profits of the last three completed years.
(iii) By way of Goodwill, his proportion of the total profits for the three preceding years.
(d)
Profits for three years were: 2020 − ` 4,200; 2021 − ` 3,900; 2022 − ` 4,500.
Y died on 1st August, 2022. Prepare necessary accounts.
Answer:
Working Notes:
WN 1
Old Ratio (X and Y) = 1/2 : 1/3 or 3:2
WN 2
Y’s share of reserve =3,000×2/5=1,200
WN 3 Calculation Y’s Share of Profit
Average profit = total profit of past given years/number of years
Average profit =4200+3900+4500/3=12600/3=4,50
Y’s Share of Profit (from April 01,2021 to August 01, 2022 ) 4,200×2/5×4/12=560
WN 4 Calculation of Y’s Share of Goodwill
Y’s share of Goodwill = Y’s Profit Share in last three year
Profit for last three years = 4,200 + 3,900 + 4,500 = ` 12,600
Y’s Share of Goodwill=12,600×2/5=5040
Question 28: A, B were partners in a firm. A died on 31sth March, 2018 and the Balance sheet of the firm on that date was as under:
On A’s death it was found that patents were valueless, furniture was to be brought down to ` 24,000, plant was to be reduced by ` 10,000 and there was a liability of ` 7,000 on account of workmen’s compensation.
Pass the necessary Journal entries for the above at the time of A’s death. (CBSE 2019)
Answer:
Question 29:
On 31st March, 2014, the Balance Sheet of Pooja, Qureshi and Ross, who were partners in a firm was as under:
Qureshi died on 1st July, 2014. The profit-sharing ratio of the partners was 2 : 1 : 1. On the death of a partner, the partnership deed provided for the following:
(i) His share in the profits of the firm till the date of his death will be calculated on the basis of average profits of last three completed years.
(ii) Goodwill of the firm will be calculated on the basis of total profit of last two years.
(iii) Interest on loan given by the firm to a partner will be charged at the rate of 6% p.a. or ` 4,000, whichever is more.
(iv) Profits for the last three years were ` 45,000; ` 48,000 and ` 33,000.
Prepare Qureshi's Capital Account to be rendered to his executors.
Answer:
Working Notes:
1. Calculation of Qureshi’s Share of Goodwill
2. Calculation of Qureshi’s Share of Loss till the date of his death
3. Calculation of Amount due on account of Loan given to Qureshi
Question 30: Shirish, Harit and Asha were partners in a firm sharing profits in the ratio of 5:4:1. Shirish died on 30th June, 2018. On this date, their Balance Sheet was follows:
According to the Partnership Deed, in addition to deceased partner’s capital, his executor is entitled to:
(i) Share in profits in the year of death on the basis of average of last two years’ profit. Profit for the year 2016-17 was 60,000.
(ii) Goodwill of the firm was to be valued at 2 years’ purchase of average of last two years’ profits.
Prepare Shirish’s Capital Account to be presented to his executor. (CBSE 2019)
Answer:
Working notes:
WN-1 Calculation of Sadhu’s share of Profit
Average Profit of last two years= 80,000+60,000/2=70,000
Shirish’s Share of Profit = 70,000×5×3/10×12 = ` 8,750
WN-2 Calculation of goodwill
The average profits of the last two years were ` 70,000
Goodwill of the Firm = ` 70,000×2=1,40,000
Share of Shirish is in Goodwill = 1,40,000 × 5/10 = 70,000
Goodwill Share of Shirish is in Goodwill will be compensated by Harish and Asha in 4:1
Harish = 70,000 × 4/5 = 56,000
Asha = 70,000 × 1/5 = 14,000
WN-3 Calculation of Sadhu’s share of undistributed Profits for the year 2017-18
Shirish’s Share of Profit = 80,000×5/10 = ` 40,000
Question 31: The Balance Sheet of A, B and C who were sharing profits in the ratio of 3:3 :4 as at 31st March, 2019 was as follows:
A died on 1st October, 2019. The partnership deed provided for the following on the death of a partner:
(a) Goodwill of the firm be valued at two years’ purchase of average profits for the last three years.
(b) The profit for the year ending 31st March, 2019 was ` 50,000.
(c) Interest on capital was to be provided @ 6% p.a.
(d) The average profits of the last three years were ` 35,000.
Prepare A’s Capital Account to be rendered to his executors. (CBSE 2020 C)
Answer:
Working notes:
WN-1 A’s share of General Reserve
A’s Share of Profit = 40,000×3/10 = ` 12,000
WN-2 Calculation of goodwill
The average profits of the last three years were ` 35,000
Goodwill of the Firm = ` 35,000×2=70,000
Share of A is in Goodwill = 70,000 × 3/10 = 21,000
Goodwill Share of A is in Goodwill will be compensated by B and C in 3:4
A = 21,000 × 3/7 = 9,000
B = 21,000 × 4/7 = 12,000
WN-3 Calculation of Interest on Capital
A’s Interest on Capital till the date of death = 60,000×6×6/100×12=1,800
Question 32:
R, S and T were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On 31st March, 2018, their Balance Sheet stood as:
T died on 1st August, 2018. It was agreed that:
(a) Goodwill be valued at 2 ½ years' purchase of average of last 4 years' profits which were:
2014-15: ` 65,000; 2015-16: ` 60,000; 2016-17: ` 80,000 and 2017-18: ` 75,000.
(b) Machinery be valued at ` 1,40,000; Patents be valued at ` 40,000; Leasehold be valued at ` 1,25,000 on 1st August, 2018.
(c) For the purpose of calculating T's share in the profits of 2018-19, the profits in 2018-19 should be taken to have accrued on the same scale as in 2017-18.
(d) A sum of ` 21,000 to be paid immediately to the Executors of T and the balance to be paid in four equal half-yearly instalments together with interest @ 10% p.a.
Pass necessary Journal entries to record the above transactions and T's Executors' Account.
Answer:
Working Notes:
WN 1 Calculation of Goodwill
Goodwill = Average Profit × Number of Year’s Purchase
Average profit = total profit of past given years/number of years
Average profit =65,000+60,000+80,000+75,000/4=2,80,000/4=70,000
∴ Goodwill = Average Profit × Number of Years’ Purchase
= 70,000 × 2.5 = ` 1,75,000
WN 2 Adjustment of Goodwill
Old Ratio (R, S and T) = 5 : 3 : 2
T died.
∴ New Ratio (R and S) = 5 : 3 and
Gaining Ratio = 5 : 3
T’s Share in Goodwill = 1,75,000×2/10=35,000
This share of goodwill is to be distributed between R and S in their gaining ratio (i.e. 5 : 3).
R’s Share of Goodwill =35,000×5/8=21875
S’s Share of Goodwill =35,000×3/8=13,125
WN 3 Calculation of T’s Share of Profit
Profit for 2017-18 = ` 75,000
T's Share of Profit for 2017-18 =75,000×2/10×4/12=`5,000
WN 4
WN 5
Question 33: Aman, Naman and Raman were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March, 2022, their Balance Sheet was as follows:
Naman died on 30th June, 2022. According to the Partnership Deed, his legal heirs were entitled to:
(a) Balance in his Capital Account.
(b) His share of goodwill will be calculated on the basis of thrice the average of the past 4 years’ profits.
(c) His share in profits up to the date of death on the basis of average profits of the last two years.
(d) Interest on capital @ 12% p.a. up to the date of his death.
The firm’s profits for the last four years ended 31st March, were:
2019: ` 2,40,000; 2020: ` 4,00,000; 2021: ` 5,20,000 and 2022: ` 4,40,000.
Naman’s Executor was paid the sum due immediately. Prepare Naman’s Capital Accounts to be presented to his legal heirs.
Answer:
Working notes:
WN-1 Naman’s share of Workers’ Compensation Reserve
Naman’s Share of Profit = 50,000×2/5 = ` 20,000
WN-2 Naman’s share of General Reserve
Naman’s Share of Profit = 2,00,000×2/5 = ` 80,000
WN-3 Naman’s share of Profit till the date of death
Average Profit =5,20,000+4,40,000/2=4,80,000
Naman’s Share of Profit = 4,80,000×2×3/5×12 = ` 48,000
WN-4 Calculation of Interest on Capital
Naman’s Interest on Capital till the date of death = 7,00,000×12×3/100×12=21,000
WN-5 Calculation of goodwill
The average profits = 2,40,000+4,00,000+5,20,000 +4,40,000/4=4,00,000
Goodwill of the Firm = ` 4,00,000×3=12,00,000
Share of Naman is in Goodwill = 12,00,000 × 2/5 = 4,80,000
Goodwill Share of Naman is in Goodwill will be compensated by Aman and Raman in 2:1
Aman = 4,80,000 × 2/3 = 3,20,000
Raman = 4,80,000 × 1/3 = ,160,000
WN-6 Naman’s share of Advertisement Suspense A/c
Naman’s Share of Profit = 50,000×2/5 = ` 20,000
Question 34:
The Balance Sheet of X, Y and Z as at 31st March, 2021 was:
The profit-sharing ratio was 3 : 2 : 1. Z died on 31st July, 2021. The Partnership Deed provides that:
(a) Goodwill is to be calculated on the basis of three years' purchase of the five years' average profit. The profits were: 2021: ` 24,000; 2020: ` 16,000; 2019: ` 20,000 and 2018: ` 10,000 and 2017: ` 5,000.
(b) The deceased partner to be given share of profits till the date of death on the basis of profits for the previous year.
(c) The Assets have been revalued as: Stock ` 10,000; Debtors ` 15,000; Furniture ` 1,500; Plant and Machinery ` 5,000; Building ` 35,000. A Bill Receivable for ` 600 was found worthless.
(d) A Sum of ` 12,233 was paid immediately to Z's Executors and the balance to be paid in two equal annual instalments together with interest @ 10% p.a. on the amount outstanding.
Give Journal entries and show the Z's Executors' Account till it is finally settled.
Answer:
Working Notes:
WN1 Calculation of Goodwill
Goodwill = Average Profit × Number of Year’s Purchase
Average profit = total profit of past given years/number of years
Average profit =24,000+16,000+20,000+10,000+5000/5=15,000
∴ Goodwill = Average Profit × Number of Years’ Purchase
= 15,000 × 3 = ` 45,000
WN2 Adjustment of Goodwill
Old Ratio = 3 : 2 : 1
Z died.
∴ New Ratio (X and Y) = 3 : 1 and
Gaining Ratio = 3 : 2
Z’s Share in Goodwill = 45,000×1/6=7,500
This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).
X’s Share of Goodwill = 7,500×3/5=4,500
Y’s Share of Goodwill = 7,500×2,5=3,000
WN3 Calculation Z’s Share of Profit
Profit for 2021 (Immediate Previous Year) = ` 24,000
∴ Z’s Profit Share = 24,000×1/6×4/12=1,333
WN4
Question 35:
X, Y and Z were partners in a firm sharing profits and losses in the 5 : 4 : 3. Their Balance Sheet on 31st March, 2021 was as follows:
X died on 1st October, 2021 and Y and Z decide to share future profits in the ratio of 7 : 5. It was agreed between his executors and the remaining partners that:
(i) Goodwill of the firm be valued at 2 ½ years' purchase of average of four completed years' profit which were:
(ii) X's share of profit from the closure of last accounting year till date of death be calculated on the basis of last years' profit.
(iii) Building undervalued by ` 2,00,000; Machinery overvalued by ` 1,50,000 and Furniture overvalued by ` 46,000.
(iv) A provision of 5% be created on Debtors for Doubtful Debts.
(v) Interest on Capital to be provided at 10% p.a.
(vi) Half of the net amount payable to X's executor was paid immediately and the balance was transferred to his loan account which was to be paid later.
Prepare Revaluation Account, X's Capital Account and X's Executor's Account as on 1st October, 2021.
Answer:
Working Notes:
WN1: Calculation of Share in General Reserve
Reserve=36,000×5/12=` 15,000
WN2: Calculation of Interest on Capital
Interest on capital=3,00,000×10×6/100×12=` 15,000
WN3: Calculation of Profit & Loss Suspense
Profit & Loss Suspense=1,80,000×5×6/12×12=` 37,500
WN4: Calculation of Share in Goodwill
Gaining Ratio = New Ratio - Old Ratio
Y's Gain = 7/12−4/12=7−4/12=3/12
Z's Gain = 5/12−3/12=5−3/12=2/12
Goodwill=Average Profit×No. of years' Purchase
=1,80,000×2.5=` 4,50,000
X's share in Goodwill = 4,50,000×5/12=`1,87,500,
`1,87,500 should be contributed by Y & Z in gaining ratio i.e. 3:2
Question 36:
X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2021, their Balance Sheet was as follows:
Y died on 30th June, 2021. The Partnership Deed provided for the following on the death of a partner:
(i) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2021, 31st March, 2020, 31st March, 2019, 31st March, 2018 and 31st March, 2017 were ` 3,20,000 (Loss); ` 1,00,000; ` 1,60,000; ` 2,20,000 and ` 4,40,000 respectively.
(ii) Y's share of profit or loss from 1st April, 2021 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2021.
You are required to calculate the following:
(a) Goodwill of the firm and Y's share of goodwill at the time of his death.
(b) Y's share in the profit or loss of the firm till the date of his death.
(c) Prepare Y's Capital Account at the time of his death to be presented to his executors.
Answer:
Working Notes:
WN1: Calculation of Share in General Reserve
Reserve=60,000×2/5=` 24,000
WN2: Calculation of Share in Goodwill
Goodwill=Average Profit×No. of years' Purchase=1,20,000×2=` 2,40,000
Y's share in Goodwill=2,40,000×2/5=` 96,000, should be contributed by X & Z in 2:1
Average Profit=Total Profits of past years given/Number of year =1,00,000+1,60,000+2,20,000+4,40,000−3,20,000/5=` 1,20,000
WN3: Calculation of Profit & Loss Suspense
Profit & loss Suspense (Loss)=3,20,000×2×3/5×12=` 32,000
Question 37: Arun, Bhim and Nakul are partners in a firm sharing profits in the ratio of 1: 1:3. Their Capital Accounts showed the following balances on 1st April, 2018:
Arun- ` 2,00,000; Bhim- ` 1,50,000 and Nakul- ` 4,50,000.
Firm closes its accounts every year on 31st March. Bhim died on 31st March, 2019. In the event of death of any partner, the Partnership provides for the following:
(i) Interest on capital will be allowed to deceased partner only from the first of day of the accounting year till the date of his death @10% p.a.
(ii) The deceased partner’s share in the Goodwill of the firm will be calculated on the basis of 2 years’ purchase of the average profit of the last three years. The profits of the firm for the last three years ended 31st March, were: 2017- ` 90,000; 2018 ` 2,00,000 and 2019- ` 1,60,000.
(iii) His share of Profits till the Date of Death: The profit of the firm for the year ended 31st March, 2019 was ` 1,60,000 before providing for interest on capital. Bhim’s Executor was paid the sum due in two equal annual instalments with interest @ 10% p.a.
Prepare Bhim’s Capital Account as on 31st March, 2019 to be presented to his executor and his Executor’s Loan Account for the year ending 31st March, 2020 and 31st March, 2021.
Answer:
Working notes:
WN-1 Calculation of goodwill
Average Profit = 90,000+2,00,000+1,60,000/3=1,50,000
Firm’s Goodwill = 1,50,000 × 2=3,00,000
Bhim’s Share of Goodwill = 3,00,000×1/5 = ` 60,000
Goodwill Share of Bhim’s is in Goodwill will be compensated by Arun and Nakul in 1:3
Arun = 1,05,000× 1/4 = 15,000
Nakul = 1,05,000× 3/4 = 45,000
WN-2 Bhim’s share of Profit till the date of death
Interest on Capital = 1,50,000×10/100=15,000
Profit After Interest on Capital = 1,60,000-15,000 =1,45,000
Bhim’s share of Profit = ` 1,45,000×1/5=29,000