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Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their Balance Sheet -solution

13. Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their Balance Sheet as on March 31, 2016 stood as follows:

Books of Arti, Bharti and Seema
Balance Sheet as on March 31, 2016

Liabilities
Amount
(Rs.)
Assets
Amount
(Rs.)
Bills Payable12,000Buildings21,000
Creditors14,000Cash in Hand12,000
General Reserve12,000Bank13,700
Capitals: Debtors12,000
Arti                      20,000 Bills Receivable4,300
Bharti                  12,000 Stock1,750
Seema                 8,00040,000Investment13,250
78,000 78,000

Bharti died on June 12, 2016 and according to the deed of the said partnership, her executors are entitled to be paid as under:(a) The capital to her credit at the time of her death and interest thereon @ 10% per annum.
(b) Her proportionate share of reserve fund.
(c) Her share of profits for the intervening period will be based on the sales during that period, which were calculated as Rs 1,00,000. The rate of profit during past three years had been 10% on sales.
(d) Goodwill according to her share of profit to be calculated by taking twice the amount of the average profit of the last three years less 20%. The profits of the previous years were:
2013 – Rs 8,200
2014 – Rs 9,000
2015 – Rs 9,800
The investments were sold for Rs 16,200 and her executors were paid out. Pass the necessary journal entries and write the account of the executors of Bharti.

SOLUTION

Books of Arti, Bharti and Seema

Journal

DateParticulars L.F.Amount
(Rs.)		Amtount
(Rs.)
2016
June,12Interest on Capital A/cDr. 240   
General Reserve A/c4,000
Profit and Loss (Suspense) A/c3,333
  To Bharti’s Capital A/c7,573
(Profit, interest and general reserve are in credited to Bharti’s Capital account)
June,12Arti’s Capital A/cDr. 3,600     
Seema’s Capital A/cDr.1,200
  To Bharti’s Capital A/c4,800
(Bharti’s share of goodwill adjusted to Arti’s and Seema’s Capital Account in their gaining ratio, 3:1)
June,12Bharti’s Capital A/c Dr. 24,373
  To Bharti’s Executor’s A/c24,373
(Bharti’s capital account is transferred to her executor’s account)
June,12Bank A/cDr. 16,200
    To Investment A/c13,250
    To Profit on Sale of       Investment2,950
(Investment sold)
June,12Bharti’s Executor A/cDr. 24,373
To Bank A/c24,373
(Bharti Executor paid)

Bharti’s Capital Account

DateParticularsJ.F.
Amount
(Rs.)
DateParticularsJ.F.
Amount
(Rs.)

2016
June 12		To Bharti’s  Executor’s A/c 24,3732016
Mar. 31		By Balance b/d 12,000
            June 12By Interest on Capital 240
    By  Profit and Loss (Suspense)3,333
     By General Reserve4,000
     By Arti’s Capital A/c3,600
     By Seema’s Capital A/c1,200
   24,373   24,373

 Executor’s Account

DateParticularsJ.F.
Amount
(Rs.)
DateParticularsJ.F.
Amount
(Rs.)
2016
June 12		Bank 24,3732016
June 12		Bharti’s Capital A/c 24,373
   24,373   24,373

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