# 12th | Ts grewal 2021-2022 Question 29 And 30 | Death of a partner

#### Page No 7.35:

Question 29: 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:

#### 7,00,000

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)

#### 2,18,750

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 30:

Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2013, their Balance Sheet was as under:

 Liabilities ` Assets ` Capital A/cs: Buildings 2,00,000 Virad 3,00,000 Machinery 3,00,000 Vishad 2,50,000 Patents 1,10,000 Roma 1,50,000 7,00,000 Stock 1,00,000 Reserve Fund 60,000 Debtors 80,000 Creditors 1,10,000 Cash 80,000 8,70,000 8,70,000

Virad died on 1st October, 2013. It was agreed between his executors and the remaining partners that:
(i) Goodwill of the firm be valued at 212 years purchase of average profits for the last three years. The average profits were  ` 1,50,000.
(ii) Interest on capital be provided at 10% p.a.
(iii) Profits for the 2013-14 be taken as having accrued at the same rate as that of the previous year which was
` 1,50,000.
Prepare Virad's Capital Account to be presented to his Executors as on 1st October, 2013.

 Virad’s Capital Account Dr. Cr. Particulars Amount (`) Particulars Amount (`) Balance b/d 3,00,000 Executor’s A/c 5,70,000 Vishad’s Capital A/c 1,12,500 Roma’s Capital A/c 75,000 Profit and Loss Suspense A/c 37,500 Reserve Fund 30,000 Interest on Capital 15,000 5,70,000 5,70,000

Calculation of Gaining Ratio of Vishad and Roma:

 Vishad Vishad Roma OLD RATION 5  : 3  : 2 NEW RATIO 3  : 2 Vishad’s =3/10-3/10 =3/10 Roma’s =2/5-2/10 =2/10

Gaining ratio=3:s2

WN1: Calculation of Virad’s Share of Goodwill:

Goodwill= Average profit × no. of purchases years’

Goodwill=  1,50,000×2 1/2 =3,75,000

Virad’s Share of Goodwill = 3,75,000×5/10=1,87,500

Vishal will give=1,87,500×3/5=1,12,500

Roma will give=1,87,500×2/5 =75,000

WN2: Calculation of Profit share of Virad:

Profit for the yeat= 1,50,000

Virad’s Share of profit = 1,50,000×6/12×5/10=37,500

WN3: Calculation of Interest on Virad ‘s Capital:

Virad’s Share of profit = 3,00,000×6/12×5/10=15,000

WN4: Virad’s share of Reserve fund:

Virad’s Share of profit = 60,000×5/10=30,000

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