Question

Arun Bhim and Nakul are partners in a firm sharing profits in the ratio of 1: 1:3. Their Capital Account
showed the following balances on 1st April, 2017.
Arun 200,000; Bhim-*1,50,000 and Nakul 450,000.
Firm clases its accounts every year on 31st March. Bhim died on 31st March, 2018. As per the Partnership
Deed his legal heirs were entitled to
Interest on capital will be allowed from the first of day of the accounting year till the date of his deat
10% pa
The deceased partner's share in the Goodwill of the firm will be calculated on the basis of 2 year
purchase of the average profit of the last three years. The profits of the firm for the last three yea
ended 31st March, were 2016–90,000; 2017- 2,00,000 and 2018-1,60,000
His share of Profits till the Date of Death: The profit of the form for the year ended 31st March, 2018 W
1,60,000 before providing for interest on capital. Bhim's Executor​

Answer 1

Explanation:

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Arjun’s Capital A/c

Bhim’s Capital A/c

Nakul’s Capital A/c

To Goodwill A/c

(Goodwill written-off)

Arjun’s Capital A/c

To Bhim’s Capital A/c

(Arjun’s share of goodwill purchased by Bhim)

Profit and Loss Appropriation A/c

To Arjun’s Capital A/c

To Nakul’s Capital A/c

(Profit after Bhim’s retirement distributed)

Dr.

Dr.

Dr.

Dr.

Dr.

42,000

15,000

18,000

10,000

1,00,000

75,000

10,000

76,000

24,000

Answer 2

g/w= 450000÷3×2

=300000

bhim's share in g/w = 300000× 1÷5 = 60000

bhim's IOC =150000×10÷100

=15000

profits = 160000 - 15000

= 145000

bhim's share in profit = 145000× 1÷ 5

= 29000