Question

Ramesh, Suresh and Naresh were partners in a firm sharing profits in the ratio of 2 : 2 : 1.
On 31st March, 2018, their Balance Sheet was as follows:
Liabilities ` Assets `
Creditors 60,000
Bank 90,000
Bills Payable 40,000
Stock 70,000
General Reserve 30,000
Debtors 40,000
Capital A/cs: Land and Building 5,00,000
Ramesh 2,36,000
Suresh 2,36,000
Naresh 98,000 5,70,000 7,00,000 7,00,000
Suresh died on 30th June, 2018.
The Partnership Deed provided for following on the death of a partner: (i) Goodwill of the firm was to be valued at 2 years’ purchase of the average profit of last 5 years.
The profits for the year ended 31st March, 2014, 31st March, 2015, 31st March, 2016 and 31st March, 2017 were ` 50,000; ` 80,000; ` 1,10,000 and ` 2,20,000 respectively. Loss for the year ended 31st March, 2018 was ` 1,60,000.​

Answer 1

Explanation:

firm sharing profits in the ratio of 2 : 2 : 1.

On 31st March, 2018, their Balance Sheet was as follows:

Liabilities ` Assets `

Creditors 60,000

Bank 90,000

Bills Payable 40,000

Stock 70,000

General Reserve 30,000

Debtors 40,000

Capital A/cs: Land and Building 5,00,000

Ramesh 2,36,000

Suresh 2,36,000

Naresh 98,000 5,70,000 7,00,000 7,00,000

Suresh died on 30th June, 2018.

The Partnership Deed provided for following on the death of a partner: (i) Goodwill of the firm was to be valued at 2 years’ purchase of the average profit of last 5 years.

The profits for the year ended 31st March, 2014, 31st March, 2015, 31st March, 2016 and 31st March, 2017 were ` 50,000; ` 80,000; ` 1,10,000 and ` 2,20,000 respectively. Loss for the year ended 31st March, 2018 was ` 1,60,000.