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 Payable	12,000	Buildings	21,000
Creditors	14,000	Cash in Hand	12,000
General Reserve	12,000	Bank	13,700
Capitals:		Debtors	12,000
Arti                      20,000		Bills Receivable	4,300
Bharti                  12,000		Stock	1,750
Seema                 8,000	40,000	Investment	13,250
	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

Date	Particulars		L.F.	Amount (Rs.)	Amtount (Rs.)
2016
June,12	Interest on Capital A/c	Dr.		240
	General Reserve A/c			4,000
	Profit and Loss (Suspense) A/c			3,333
	To Bharti’s Capital A/c				7,573
	(Profit, interest and general reserve are in credited to Bharti’s Capital account)
June,12	Arti’s Capital A/c	Dr.		3,600
	Seema’s Capital A/c	Dr.		1,200
	To Bharti’s Capital A/c				4,800
	(Bharti’s share of goodwill adjusted to Arti’s and Seema’s Capital Account in their gaining ratio, 3:1)
June,12	Bharti’s Capital A/c	Dr.		24,373
	To Bharti’s Executor’s A/c				24,373
	(Bharti’s capital account is transferred to her executor’s account)
June,12	Bank A/c	Dr.		16,200
	To Investment A/c				13,250
	To Profit on Sale of       Investment				2,950
	(Investment sold)
June,12	Bharti’s Executor A/c	Dr.		24,373
	To Bank A/c				24,373
	(Bharti Executor paid)

Bharti’s Capital Account

Date	Particulars	J.F.	Amount (Rs.)	Date	Particulars	J.F.	Amount (Rs.)
2016 June 12	To Bharti’s  Executor’s A/c		24,373	2016 Mar. 31	By Balance b/d		12,000
				June 12	By Interest on Capital		240
					By  Profit and Loss (Suspense)		3,333
					By General Reserve		4,000
					By Arti’s Capital A/c		3,600
					By Seema’s Capital A/c		1,200
			24,373				24,373

 Executor’s Account

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

9 10 11 12 13 Chapter-5