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CHP 5 Death

The document presents a series of accounting problems related to the death of partners in a firm, focusing on the calculation of profit shares and journal entries required for accounting purposes. It includes scenarios involving the distribution of profits based on historical data, the calculation of goodwill, and the preparation of capital accounts after a partner's death. Each question outlines specific details regarding profit-sharing ratios, profit calculations, and necessary journal entries for the deceased partners' shares.

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devchandathokpam15122002
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33 views1 page

CHP 5 Death

The document presents a series of accounting problems related to the death of partners in a firm, focusing on the calculation of profit shares and journal entries required for accounting purposes. It includes scenarios involving the distribution of profits based on historical data, the calculation of goodwill, and the preparation of capital accounts after a partner's death. Each question outlines specific details regarding profit-sharing ratios, profit calculations, and necessary journal entries for the deceased partners' shares.

Uploaded by

devchandathokpam15122002
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Q.1) Ram, Manohar and Param were partners in a firm. Param died on 28th February, 2022.

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 of three completed years of profit before death. Profit
for the years ended 31st March, 2019, 2020 and 2021 were 80,000; 90,000 and 1,00,000
respectively. Calculate Param share of profit till his death and pass journal entry for the
same when: i) Profit sharing ratio of remaining partner does not change and ii) Profit sharing
ratio of remaining partners change and new ratio being 3:2.

Q.2) Manoj, Rakesh and Harsh were partners sharing profit in the ratio of 2:2:1. Manoj died
on 30th June, 2021. Rakesh and Harsh decided to continue the business. Share of profit or
loss of the deceased partner form the beginning of the year up to the date of death was to be
determined on the basis of last vear profit. Last year's loss was 2,00,000. Pass necessary
journal entry to record Manoj's Share of profit/loss up to the date of death

Q.3) Manu, Neha and Shreya were partners in a firm sharing profits & losses in the ratio of
2:3:5. The firm closes its books on 31st March every year. As per the terms of partnership
deed on the death of any partner, the share of goodwill of the deceased partner will be
calculated on the basis of 50% of the net profit credited to the partner's capital account
during the last four completed years before death. Manu died on 1st July. The profits for the
last four years were:
Year Profits. 2017-18 (25,000) 2018-19 (105,000) 2019-20 (30,000) 2020-21 (84,000)

Q.4) The balance sheet of X, Y and Z as at 31-3-2021 was


Liabilities Amount Asset Amount
Bills Payable 2000 Cash at bank 5800
Capital of X 22750 Bills receivable 800
Capital of Y 15250 Stock 9,000
Capital of Z 12000 Debtors 16000
Loans 7100 Furniture 2000
General Reserve 6000. Plant and machinery. 6500
Employee provident fund. 5000. Building 36000
Work men Com fund. 6000

The profit-sharing ratio was 3:2:1. Z died on 31st July, 2021. The partnership deed provides
that:
a) Goodwill is to be calculated on the basis of three years purchase of the five year's
average profit. The profits for the year ended 31st march were: 2021: 24,000, 2020: 16,000,
2019: 20,000; 2018: 10,000 and 2017: 5,000.
b) The deceased partner to be given share of profits till the date of death on the basis of
profits for the previous year
c) Interest on capital @6% p.a.
d) A sum of 5,000 was paid immediately to Z executor and the balance to be transferred to
his loan Account. Prepare Z's Capital Account & Z's executor A/c na

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