12th ACC death of a partner

 Q. 1

Name the account which is opened to transfer the share of profit of the deceased partner in the year of his death.

Ans

Profit & Loss Suspense A/c.

Q. 2 

When is Partner’s Executors’ Account prepared?

Ans

Partner’s Executor’s Account is prepared at the time of settlement of accounts of deceased partner.

Q. 3

A, B and C were partners in a firm. C died on 28th Feb 2014. His share of profit from the closure of the last accounting year till the date of death was to be calculated on the basis of the average profit of three complete years before death, profit for 2011 2012 and 2013 were Rs. 1400 and Rs. 1600 and Rs. 1800 respectively.

Calculate C’s share of profit till his death.

Ans: Average profit = 14,000 +16,000 +18,000

3

=48,000/3 = 16000

                  Estimate profit till the date of death = 16,000 X 212 = 2666.66

                   C’s share of estimated profit = 2666.66 x 13 = 888.8

Q. 4

A B and C are partners sharing profit and losses in the ratio 2:2:1 . C died on 31st March 2014 profit and sales for the calendar year 2013 were Rs. 3,00,000 and Rs. 30,00,000 respectively. Sales during Jan to March 2014 were 4,50,000. Calculate share and profit of C up to date of death.

Hint:- C’s share 9,000.

Q.5

Ajit and Bijit are in partnership sharing profits and losses in the ratio of 3: 2. Bijit died three months after the date of the last Balance Sheet prepared on 31.03.2012. According to the Partnership Deed, Bijit’s representative is entitled to the following payments:

His capital as per the last Balance Sheet.

Interest on above capital @ 6% p.a. till the date of death.

His share of profits till the date of death calculated on the basis of last year’s profits.

Bijit’s capital as per the last Balance Sheet was Rs. 40,000 and his drawings till the date of death were Rs. 5,000. The last year’s profits were Rs. 30,000. Draw Bijit’s Account to be rendered to his legal representative. 

Ans

Bijit’s Capital A/c

Particulars

Amount (Rs.)

Particulars

Amount (Rs.)

Drawings         

Bijit’s Executor’s A/c

5,000

38,600

Balance b/d                   

Interest on Capital        

Profit & Loss Suspense A/c

40,000

600

3,000

43,600

43,600

Q. 6

X, Y and Z are partners sharing profits and losses in the ratio of 2:2:1 respectively. Their Balance Sheet as on 31st March 2020 was as follows—

Liabilities

Rs.

Assets

Rs.

Sundry Creditors

1,00,000

Cash at bank

   20,000

Capital Accounts

Stock

   30,000

X

    60,000

Sundry Debtors

   80,000

Y

1,00,000

Investments

   70,000

Z

    40,000

Furniture

   35,000

General Reserve

    50,000

Buildings

1,15,000

3,50,000

3,50,000

Z died on 30th September 2020 and the following was provided—

“Z” will be entitled to his share of profit upto the date of death based on last year’s profit.

Z’s share of Goodwill will be calculated on the basis of 3 years purchase of average profits of last four years . The profits of the last four years was as follows—

Year I – 80,000, Year II –Rs. 50,000 Year III – Rs. 40,000 and Year IV –Rs. 30,000

Interest on Capital was provided at 12% p.a.

Drawings of the deceased partner upto the date of death was Rs. 10,000.

Rs. 15,400 should be paid immediately to the executor of the deceased partner and the balance in four equal yearly installments with interest at 12% on remaining balance.

Prepare Z’s capital account and Z’s executors account till the account is finally closed.

Ans

Z’s Capital Account

Particulars

Rs.

Particulars

Rs.

To Drawings

10,000

To Balance b/d

40,000

To Z’s Executor’s a/c

75,400

To General Reserve

10,000

To Profit &Loss Suspense a/c

  3,000

To Interest on capital

2400

To X’s Capital a/c

15,000

To Y’s capital a/c

15,000

85400

85400

Z’s Executor’s Account

Date

Particulars

Rs.

Date

Particulars

Rs.

30/09/07

Bank a/c

15400

30/09/07

Z’s Capital a/c

 75400

31/03/08

Balance c/d

63600

31/03/08

Interest on Loan

(on Rs. 60,000@12% for 6 months)

  3600

79000

      79000

30/09/08

Bank a/c           

 ( 15000+ 7200)

22,200

1/04/08

Balance b/d

63600

31/03/09

Balance c/d

47,700

30/09/08

Interest on Loan(On Rs. 60,000 @ 12% for 6 months)

  3600

31/03/09

Interest on Loan(on Rs. 45000 @12% for 6 months)

  2700

69900

69900

30/09/09

Bank a/c

(15000+5400)

20,400

1/04/09

Balance b/d

47,700

 31/03/10

Balance c/d

31800

30/09/09

Interest on loan(on Rs. 45000 @ 12% for 6 months)

  2700

31/03/10

Interest on loan ( on Rs. 30,000@12% for 6 months)

 1800

52200

52200

30/09/10

Bank a/c(15000 + 3600)

18600

1/4/10

Balance b/d

31800

31/03/11

Balance c/d

15900

30/09/10

Interest on loan(on Rs. 30,000 @12% for 6 months

)

 1800

31/03/11

Interest on Loan(on Rs. 15000 @12% for 6 months)

   900

34500

34500

30/09/11

Bank a/c

(15000+1800)

16800

1/04/11

Balance b/d

15900

30/09/11

Interest on loan(on Rs. 15000 @12% for 6 months)

   900

16800

16800