2. Calculation of the total amount due to the
representatives of the deceased partner
Particulars Amount Particulars Amount
To goodwill
To Drawings
To Interest on drawings
To His Share of
accumulated losses
By Revaluation A/c
(Loss)
To Deceased Partner’s
executor’s a/c
By Balance b/d
By His Share in reserve
or accumulated profits
By Revaluation A/c
(Profit)
By his share of goodwill
By Interest on capital
By Salary
By Profit & Loss
(suspense) A/c
Deceased Partner’s Capital A/c
2prepared by Preksha Mehta
3. QUESTION
• A, B and C were partners in a firm sharing
profits in the ratio of 5:3:2. Their balance
sheet as at 31/03/2020 was as follows:
Liabilities Amount Assets Amount
Creditors
Reserves
A’s Capital
B’s Capital
C’s Capital
6000
3000
12000
6000
4000
Building
Machinery
Stock
Debtors
Bank
Advertisement
Suspense
10,000
8,000
2550
3000
3450
4000
31000 31000
3prepared by Preksha Mehta
4. QUESTION
A died on 30/09/2020 and B and C decided to share future
profits in 7:3. As per the partnership agreement, A’s
executors were entitled to:
a. Amount standing to the credit of A’s Capital A/c
b. Interest on capital 12% p.a.
c. Share of goodwill on the basis of four years purchase of
last three years average profits. Profits for the year
2018, 2019, 2020 were Rs 4000, Rs 6000, Rs 3500
respectively.
Prepare A’s Capital account to be rendered to his executors.
4prepared by Preksha Mehta
5. SOLUTION
Particulars Amount Particulars Amount
To Advertisement
suspense
To A’s executors a/c
2000
21220
By Balance b/d
By Reserve
By B’s Capital A/c
By C’s Capital A/c
By Interest on capital
A/c
12000
1500
7200
1800
720
23220 23220
A’s Capital A/c
5prepared by Preksha Mehta
6. SOLUTION
Working Notes:
• Interest on A’s Capital = 12000x12/100x6/12 = 720
• Calculation of A’s share of Goodwill=
Gain Ratio = New Share – Old Share
B = 7/10-3/10 = 4/10
C = 3/10-2/10 = 1/10
Gain Ratio = 4:1
6prepared by Preksha Mehta
7. SOLUTION
Working Notes:
• Average Profits = (4000 + 6000 + 3500)/3 = 13500/3
= 4500
• Goodwill = 4500x4 = 18000
B’s Capital A/c Dr 7200
C’s Capital A/c Dr 1800
To A’s Capital A/c 9000
7prepared by Preksha Mehta
9. On the basis of time period
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year. A died
on 30th June 2019 and as per the agreement the
share of profits of a deceased partner upto the
date of the death is to be calculated on the basis
of average profits of the last five years. Profits for
last five years were Rs 14,000, Rs 18,000, Rs
16000, Rs 10,000 (loss) and Rs 16000. Calculate
A’s share of profits upto the date of the death and
pass the necessary journal entry.
9prepared by Preksha Mehta
10. On the basis of time period
Solution:
A’s share of profits = 10,800x3/12x1/3 = 900
Average profits = (14,000+18000+16,000-
10,000+16000)/5 = 54000/5 = 10,800
Date Particulars l.f. Amount(DR) Amount (Cr)
Profit and Loss Suspense A/c Dr
To A’s Capital A/c
(Being share of profits of A till
date of his death)
900
900
JOURNAL
10prepared by Preksha Mehta
11. On the basis of time period
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year. A died
on 30th June 2019 and as per the agreement the
share of profits of a deceased partner upto the
date of the death is to be calculated on the basis
of profits of the last year. Profits for last five years
were 2015 Rs 14,000, 2016 Rs 18,000, 2017 Rs
16000, 2018 Rs 10,000 (loss) and 2019 Rs 16000.
Calculate A’s share of profits upto the date of the
death and pass the necessary journal entry.
11prepared by Preksha Mehta
12. On the basis of time period
Solution:
A’s share of profits = 16,000x3/12x1/3 = 1,333
Date Particulars l.f. Amount(DR) Amount (Cr)
Profit and Loss Suspense A/c Dr
To A’s Capital A/c
(Being share of profits of A till
date of his death)
1333
1333
JOURNAL
12prepared by Preksha Mehta
13. On the basis of time period
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year. A died
on 30th June 2019 and as per the agreement the
share of profits of a deceased partner upto the
date of the death is to be calculated on the basis
of average profits of the last five years. Profits for
last five years were Rs 14,000, Rs 18,000, Rs
16000, Rs 10,000 (loss) and Rs 16000. B and C
decided to share future profits in the ratio 3:2.
Calculate A’s share of profits upto the date of the
death and pass the necessary journal entry.
13prepared by Preksha Mehta
14. On the basis of time period
A’s share of profits = 10,800x3/12x1/3 = 900
Gain Ratio = New share – Old share
B = 3/5-1/3 = 9-5/15 = 4/15
C = 2/5-1/3 = 6-5/15 = 1/15
Date Particulars l.f. Amount(DR) Amount (Cr)
B’s Capital A/c Dr
C’s Capital A/c Dr
To A’s Capital A/c
(Being share of profits of A till
date of his death)
720
180
900
JOURNAL
14prepared by Preksha Mehta
15. PRACTICE QUESTION
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year. A died
on 30th June 2019 and as per the agreement the
share of profits of a deceased partner upto the
date of the death is to be calculated on the basis
of total profits of the last five years. Profits for
last five years were Rs 14,000, Rs 18,000, Rs
16000, Rs 10,000 (loss) and Rs 16000. Calculate
A’s share of profits upto the date of the death and
pass the necessary journal entry.
(Answer: A’s share of profits = 4500)
15prepared by Preksha Mehta
16. On the basis of Sales
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year.
Their profit sharing ratio is 4:3:2. A died on
31st December 2019 . Sales and profits for the
year ending 31st March 2019 amounted to Rs
400,000 and Rs 60,000 respectively. Sales for
the period between 1st April 2019 to 31st
December 2019 amounted to Rs 3,30,000.
Calculate A’s share of profits and pass the
necessary journal entry.
16prepared by Preksha Mehta
17. On the basis of Sales
Sol: Profit Ratio = 60,000/400,000 x 100 = 15%
Profit during the period of 1st April 2019 to 31st
December 2019 = 15/100 x 330,000 = 49500
A’s share of profit = 49,500x4/9 = Rs 22,000
Date Particulars l.f. Amount(DR) Amount (Cr)
Profit and Loss Suspense A/c Dr
To A’s Capital A/c
(Being share of profits of A till
date of his death)
22000
22000
JOURNAL
17prepared by Preksha Mehta
18. On the basis of Sales
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year. Their
profit sharing ratio is 5:3:2. A died on 30th
September 2019 . Sales for the year ending 31st
March 2019 amounted to Rs 200,000 and profit
for the same year was 9 percent on the sales.
Sales for the period between 1st April 2019 to 30th
September 2019 amounted to Rs 1,20,000.
Calculate A’s share of profits and pass the
necessary journal entry.
18prepared by Preksha Mehta
19. On the basis of Sales
Sol: Profit Ratio = 9%
Profit during the period of 1st April 2019 to 30th
September 2019 = 9/100 x 120,000 = 10,800
A’s share of profit = 10,800 x 5/10= 5400
Date Particulars l.f. Amount(DR) Amount (Cr)
Profit and Loss Suspense A/c Dr
To A’s Capital A/c
(Being share of profits of A till
date of his death)
5400
5400
JOURNAL
19prepared by Preksha Mehta
20. QUESTION
A, B and C were partners sharing profits in 2:2:1.
Their books were closed on 31st March every
year. B died on 1st August 2019. His share of
profit upto his date of death on the basis of
sales till date of death. Sales for the year
ended 31st March 2019 was Rs 400,000 and
profit for the same year was Rs 80,000. Sales
shows a growth trend of 25% and percentage
of profit earning is increased by 4%. Calculate
B’s share of profits.
22. PRACTICE QUESTION
• Ques: A, B and C are partners in a firm whose
books are closed on 31st March each year.
Their profit sharing ratio is 2:2:1. B died on
30th June 2019 . Sales and profits for the year
ending 31st March 2019 amounted to Rs
600,000 and Rs 180,000 respectively. Sales in
the year 2019-20 till the date of B’s death
amounted to Rs 1,20,000. Calculate B’s share
of profits and pass the necessary journal
entry. (Answer Rs 14,400)
22prepared by Preksha Mehta
23. QUESTION
• A, B and C were partners in a firm sharing
profits in the ratio of 5:4:3. Their balance
sheet as at 31/03/2019 was as follows:
Liabilities Amount Assets Amount
Creditors
Reserves
A’s Capital
B’s Capital
C’s Capital
12000
3000
15000
12500
7500
Building
Machinery
Stock
Debtors
Bank
Advertisement
Suspense
Patents
10,000
15,000
5000
4000
4500
6000
5500
50,000 50,000
23prepared by Preksha Mehta
24. QUESTION
A died on 30/09/2019 and B and C decided to share future
profits in 7:5. As per the partnership agreement, A’s executors
were entitled to:
a. Interest on capital 10% p.a.
b. Share of goodwill on the basis of 2.5 years purchase of last
four years average profits. Profits for the year 2016, 2017,
2018, 2019 were Rs 9500, Rs 7500, Rs 10,000 and 9,000
respectively.
c. Patents be valued at Rs 4000, Machinery at Rs 14000 and
Building at Rs 12500.
d. Profit for the year 2019-20 be taken as having accrued at
the same rate as that of previous year.
Prepare A’s Capital account to be rendered to his executors.
24prepared by Preksha Mehta
25. SOLUTION
Particulars Amount Particulars Amount
To Advertisement
suspense A/c
To A’s executors a/c
2500
25750
By Balance b/d
By Reserve
By B’s Capital A/c
By C’s Capital A/c
By Interest on capital A/c
By B’s Capital A/c
By C’s Capital A/c
15000
1250
5625
3750
750
1125
750
28250 28250
A’s Capital A/c
25prepared by Preksha Mehta
27. SOLUTION
Working Notes:
• Interest on A’s Capital = 12000x12/100x6/12 = 720
• Share of A’s profits = 9000 x 5/12 x 6/12= 1875
• Calculation of A’s share of Goodwill=
Gain Ratio = New Share – Old Share
B = 7/12-4/12 = 3/12
C = 5/12-3/12 = 2/12
Gain Ratio = 3:2
27prepared by Preksha Mehta
28. SOLUTION
Working Notes:
• Average Profits = (9500+7500+10,000+9000)/4=
36000/4 = 9000
• Goodwill = 9000x2.5 = 22500
B’s Capital A/c Dr 5625
C’s Capital A/c Dr 3750
To A’s Capital A/c 9375
28prepared by Preksha Mehta
29. QUESTION
• A, B and C were partners in a firm sharing
profits in the ratio of 3:3:4. Their balance
sheet as at 31/03/2019 was as follows:
Liabilities Amount Assets Amount
Bills Payable
Reserves
loan
A’s Capital
B’s Capital
C’s Capital
10,000
5000
12000
60,000
50,000
40,000
Cash
Stock
Investment
Building
A’s loan
16000
44000
47000
60,000
10,000
177000 177000
29prepared by Preksha Mehta
30. QUESTION
A died on 1st August 2019. The executors of A are entitled to
a. His share of goodwill. Total goodwill of firm was valued
at 2 years purchase of average profits for the last three
years which were Rs 40,000.
b. His share of profit upto his date of death on the basis of
sales till date of death. Sales for the year ended 31st
March 2019 was Rs 400,000 and that from 1st April 2019
to 1st August 2019 Rs 150,000. Profits for the year
ended 31st March 2019 was Rs 100,000.
c. Interest on capital was to be provided @ 6% p.a.
Prepare A’s Capital account to be rendered to his executors.
30prepared by Preksha Mehta
31. HINTS TO SOLUTION
a. Balance of Capital = 60000
b. His share of goodwill = 80,000x3/10 = 24000
c. His share of profit = 37500x3/10 = 11250
d. Interest on capital = 6/100x60,000x4/12 = 1200
e. His share of reserve = 3/10x5000 = 1500
f. A’s loan (Dr)= 10,000
A’s executors → 87950
31prepared by Preksha Mehta
32. QUESTION
• Abha, Bibha and Chitra were partners in a firm
sharing profits in the ratio of 2:2:1. Their
balance sheet as at 31/03/2019 was as
follows:Liabilities Amount Assets Amount
Trade Payable
Bank loan
Abha’s Capital
Bibha’s Capital
Chitra’s Capital
17,000
13000
77,000
87,000
46,000
Cash
Trade receivable
Stock
Building
Profit and Loss A/c
40000
23000
16000
104000
57000
240000 240000
32prepared by Preksha Mehta
33. QUESTION
Abha died on 30th June 2019. The executors of Abha are
entitled to Interest on capital @ 12% p.a. Her share of
profit upto his date of death on the basis of average
profits of last four years. Profits of last four years were:
2016- Rs 204,000, 2017- Rs 180,000, 2018-Rs 90,000,
2019- loss Rs 57000.
On 1st April 2019, Abha withdrew Rs 15000 to pay for her
medical bills.
Prepare Abha’s Capital account to be rendered to his
executors.
33prepared by Preksha Mehta
34. HINTS TO SOLUTION
• Capital = 77000
• Interest on Capital = 12/100X77000X3/12 = 2310
• Profit = 104250X3/12X2/5 = 10425
• Drawings = 15000
• Share in profit and loss A/c (acc loss) = 22800
• Executors 51,935
34prepared by Preksha Mehta
35. QUESTION
• A, B and C were partners in a firm sharing
profits in the ratio of 7:2:1. Their balance
sheet as at 31/03/2019 was as follows:
Liabilities Amount Assets Amount
Creditors
General Reserve
Loan from B
A’s Capital
B’s Capital
C’s Capital
14,000
20,000
30,000
70,000
20,000
10,000
Cash
Debtors
Stock
Building
Machine
Goodwill
5000
12000
7000
60000
40000
40000
164000 164000
35prepared by Preksha Mehta
36. QUESTION
B died on 24th August 2019. The executors of B are entitled
to
a. His share of profit upto his date of death on the basis of
average profits of last three years which were Rs
80,000.
b. Building were revalued at Rs 94000, machinery at Rs
38000 and stock at Rs 5000. A provision of 2.5% was to
be created on debtors for bad and doubtful debts.
Prepare revaluation a/c and partners’ capital a/c.
36prepared by Preksha Mehta
37. HINTS TO SOLUTION
• B’s share of profit = 80,000x2/10x146/365 = 6400
• Revaluation A/c = 34000-2000-2000-300 = 29700
Particular
s
A B C Particulars A B C
To
goodwill
To Bal c/d
To B’s
executors
28000
76790
8000
28340
4000
10,970
By bal b/d
By
g.reserve
By
revaluation
By p/l
suspense
70,000
14000
20790
20,000
4000
5940
6400
10,000
2000
2970
104790 36340 14970 104790 36340 14970
Partners’ Capital A/c
37prepared by Preksha Mehta
38. HINTS TO SOLUTION
B’s executors A/c
Particulars Amount Particulars Amount
To B’s executor’s
loan A/c
59060 By B’s Capital
By B’s loan
By interest on B’s
loan
(30,000X6/100X146
/365)
28340
30,000
720
59060 59060
38prepared by Preksha Mehta