10)
Manu, Kavita and Om were partners sharing profits and losses in the ratio of 3:2:1
Kavita died on 30 June 2020 and Manu and Om decided to share future profits in the ratio of
3:2. Her Share of profit for the intervening period was based on the sales during that period,
which were Rs.7,20,000. The rate of profit during the past four years had been 10% on Sales.
The firm closes its books on 31" March every year. Calculate Kavita's Share of Profits and
pass the necessary Journal Entry.
Answers
Answer:
JOURNAL
1. Cash a/c... Dr. 350000
To C's Capital a/c 200000
To Premium for Goodwill a/c 150000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c... Dr. 150000
To A's Capital a/c 110000
To B's Capital a/c 40000
(Being premium for goodwill distributed among the partners in the ratio of 11:4)
3. A's Capital a/c.... Dr. 55000
B's Capital a/c.... Dr. 20000
To Cash a/c 75000
(Being half of the premium for goodwill withdrawn by the partners)
Calculation of sacrificing ratio:
A's sacrifice= 3/5- 2/7= 11/35
B's sacrifice= 2/5- 2/7= 4/35
Sacrificing ratio= 11:4
Working Note:
Distribution of goodwill:
A's share= 150000 * 11/15= 110000
B's share= 150000 * 4/15= 40000
Answer:
The answer is Rs. 24,000.
Explanation:
i) Given,
Rate of profit = 10% of sales
ii) Hence,
Total profit = Sales x Rate of profit
= 720000 x 10%
= Rs 72000
iii) Kavita's share of profit
= Total profit x (2/6)
= 72000 x (2/6)
= Rs 24,000
iv) Hence, Kavita's share of profit is Rs. 24,000.
#SPJ2