Question

Q 12. A, B, &C were partners in a firm sharing profits in the ratio of 3:4:3. The firm
closes its accounts on 31" March every year. On 1-7-2020 A died. A's share of profits of
the firm in the year of his death was to be calculated on the basis of average profits of last
two years which were Rs 1.10,000 and 1.90,000. Goodwill of the firm was valued at Rs.
3,50,000. Pass the necessary journal entries to record A's share of goodwill and profit. (3)​

Answer 1

Answer:

25000

Explanation:

ANSWER

If Joint Life Policy appears in the Balance Sheet at surrender value, then the firm will gain on the death of a partner and partners will get

policy amount - Surrender value i.e., in their profit sharing ratio

Rs. 120000 - Rs. 20000 = Rs. 100000

Distribution of JLP among the partners is :

A = 100000 * (2/4) = 50000

B = 100000 * (1/4) = 25000

C = 100000 * (1/4) = 25000