X, Y and Z are partners sharing profits in the ratio of 6 : 5 : 4. The firm cloes its books on 31st March every year. Y died on 30-06-2017. On the date of his death, the value of goodwill of the firm was Rs 3,00,000. The share of profit in the firm from the date of last balance sheet till the death is calculated on the basis of sales. Sales during this period is Rs 6,00,000. The firm earns on an average 20% profit on sales. Y’s Capital A/c stood at Rs 2,50,000 on the date of balance sheet. He is entitled to a interest on capital @ 6% p.a.
Give journal entries for the above transactions on death of Y.
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share of Y in profit = 6,00,000×20/100×5/15 = 40,000
share of Y in goodwill = 3,00,000×5/15 = 1,00,000
gain of old partners = 6:4 or 3:2
Y's interest on capital = 2,50,000×6/100×3/12 = 3750
entries -->
profit and loss suspense AC.... Dr 40,000
to Y's capital account 40,000
for goodwill -->
X's capital account..... Dr 60,000
Z's capital account......dr 40,000
to Y's capital account 1,00,000
for interest -->
interest on capital account.... Dr. 3750
to Y's capital account 3750
amount payable to Y's executor = 2,50,000+40,000+1, 00,00+3750 = 3,93,750
Y's capital account..... Dr. 3,93,750
to Y's executor account 3,93,750
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