Ajay , vijay & son jevar partner is a Ajay Vijay and son jevar partner in a firm sharing profits in the ratio 1 2 1. The firm closes its
books on 31st March every year. on 30th September 2019 Vijay died. on that date his capital account
showed a Debit balance of 5,000. there was a Debit balance of 30000 in profit and loss account. The
Goodwill of the firm was valued at 380000. Vijay's share of profit in the year of his death was to be
calculated on the basis of average profit of the last five years. The profit for the last 5 years are 65000;
80000; 70000; 105000 and 130000.
pass necessary journal entries in the books of the form on Vijay's death.
Answers
Answer:
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Answer:
Profit and Loss Appropriation Account
For the year ended 31st March 2018
Particulars
Amount (Rs.)
Particulars
Amount (Rs.)
To salary to be credited to capital accounts of:
By Profit for the year
15,00,000
Jay
1,80,000
By Jay’s Capital A/c
25,000
Vijay
1,80,000
3,60,000
To divisible profit to be credited to Capital accounts of:
Jay
3,05,800
Vijay
3,59,200
Karan
5,00,000
11,65,000
15,25,000
15,25,000
Working note 1:
Computation of divisible profit and its distribution between partners:
Divisible profit = 11,65,000
Jay’s share in divisible profit = 11,65,000 * 2/5 = 4,66,000
Vijay’s share in divisible profit = 11,65,000 * 3/5 = 4,66,000
Karan’s share in divisible profit = 11,65,000 * 1/5 = 2,33,000
Profit share guaranteed to Karan = 5,00,000
Deficiency to Karan’s share in profit = 5,00,000 – 2,33,000 = 2,67,000
Deficiency to be borne by Jay = 2,67,000 * 3/5 = 1,60,200
Deficiency to be borne by Vijay = 2,67,000 * 2/5 = 1,06,800
Final share in divisible profit for:
Jay = 4,66,000 – 1,60,200 = 3,05,800
Vijay = 4,66,000 – 1,06,800 = 3,59,200
Karan = 2,33,000 + 1,60,200 +1,06,800 = 5,00,000
Dr. Partner’s Capital A/c Cr.
Date
Particulars
Jay (Rs.)
Vijay (Rs.)
Karan (Rs.)
Date
Particulars
Jay (Rs.)
Vijay (Rs.)
Karan (Rs.)
2018
2018
Mar. 31
To Profit & Loss Appropriation A/c
25,000
Mar. 31
By Profit & Loss Appropriation A/c
1,80,000
1,80,000
Mar. 31
To Balance c/d
4,60,800
5,39,200
5,00,000