Nutan, Sumit and Shiba are partners in a firm sharing profits in the ratio 5 : 3 : 2.
On 31st December 2014 their Balance Sheet was as under:
Liabilities Amount Assets Amount
(`) (`)
Creditors 52,000 Building 60,000
Reserve Fund 15,000 Plant 50,000
Capitals : Stock 27,000
Nutan 60,000 Debtors 25,000
Sumit 45,000 Cash 10,000
Shiba 30,000 1,35,000 Bank 30,000
2,02,000 2,02,000
Nutan died on 1 July 2015. It was agreed between her executor and the remaining
partners that:
(i) Goodwill to be valued at 2½ years purchase of the average profits of the last
Four years, which were: 2011 ` 25,000; 2012 ` 20,000; 2013 `40,000 and
2014 `35,000.(ii) Building is valued at ` 70,000; Plant at `46,000 and Stock at ` 32,000.
(iii) Profit for the year 2015 be taken as having accrued at the same rate as that
of the previous year.
(iv) Interest on capital is provided at 9% p.a.
(v) On 1 July 2015 her drawings account showed a balance of `.20,000.
(vi) ` 25,950 are to be paid immediately to her executor and the balance is
transferred to her Executors Loan Account.
Prepare Nutan’s Capital Account and Nutan’s Executor’s Account as on 1st July
2015.
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