Question

Iqbal and Kapoor are in partnership sharing profits and losses in 3 : 2. Kapoor died three months after the date of the last Balance Sheet. According to the Partnership Deed, the legal personal representatives of Kapoor are entitled to the following payments:
(a) His capital as per the last Balance Sheet.
(b) Interest on above capital @ 3% p.a. till the date of death.
(c) His share of profits till the date of death calculated on the basis of last year’s profits.
His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period. The net profits for the last three years, after charging insurance premium, were ₹ 20,000; ₹ 25,000 and ₹ 30,000 respectively. Kapoor’s capital as per Balance Sheet was ₹ 40,000 and his drawings till the date of death were ₹ 5,000.
Draw Kapoor’s Capital Account to be rendered to his representatives.

Answer 1

Explanation:

Working Notes:

1. Calculation of Interest on Capita:

Interest on Capital = $\text { Capital } \times \frac{\text { Rate }}{100} \times \frac{\text { Time }}{12}$

$= 40,000 \times \frac{3}{100} \times \frac{3}{12}$

= 300.

2. Calculation of Share of Profit:

Profits = $Previous Year's Profit \times \frac{\text { Time }}{12} \times Share in Profits$.

3. Calculation of Interest on Drawings Interest on Drawings:

Interest on Drawings = $Drawings \times 2 \%=5,000 \times 2 \%=100$.

Answer 2

i hope it is helpful for you ....