Question

Shobha, Kalyani and Kaveri were partners in a firm sharing profits and losses in the ratio of 3 : 5 : 2. The firm closes its books on 31st March every year. On 30th June, 2024 Kalyani died. On that date, her capital account showed a credit balance of \rupee~3,00,000. On the same date the firm had a General Reserve of \rupee~1,20,000.
The partnership deed provided for the following on the death of a partner: (i) Balance in her capital account.
(ii) Interest on capital @ 12% p.a.
(iii) Her share in the profits of the firm till the date of her death calculated on the basis of previous year’s profits. The profit of the firm for the year ended 31st March, 2024 was \rupee~2,80,000.
(iv) Her share in the goodwill of the firm. The goodwill of the firm on Kalyani’s death was valued at \rupee~4,00,000.
Prepare Kalyani’s Capital Account to be presented to her executors.

Hint:

When a partner dies, calculate their share of profit proportionately till the date of death based on the previous year's profit unless actual figures are available.

Answer 1

Step 1: Opening balance of Capital Account
Given Capital = \rupee~3,00,000
Step 2: Share in General Reserve
General Reserve = \rupee~1,20,000 Ratio = 3 : 5 : 2
Kalyani’s share = \(\frac{5}{10} \times 1,20,000 = \rupee~60,000\)
Step 3: Interest on Capital for 3 months
Capital = \rupee~3,00,000, Rate = 12%, Time = 3 months
Interest = \(3,00,000 \times \frac{12}{100} \times \frac{3}{12} = \rupee~9,000\)
Step 4: Share in Profit (for 3 months based on previous year)
Previous year’s profit = \rupee~2,80,000
Kalyani’s share = \(\frac{5}{10} \times \frac{3}{12} \times 2,80,000 = \rupee~35,000\)
Step 5: Share in Goodwill
Goodwill of firm = \rupee~4,00,000 Kalyani’s share = \(\frac{5}{10} \times 4,00,000 = \rupee~2,00,000\)
Kalyani’s Capital Account (to be presented to her executors) \newpage \begin{verbatim} Dr. KALYANI’S CAPITAL ACCOUNT Cr. ------------------------------------------------------------ Particulars ₹ Amount ₹ Particulars ₹ Amount ------------------------------------------------------------ To Executors A/c ₹ 6,04,000 ₹ By Balance b/d ₹ 3,00,000 ₹ ₹ By Gen. Reserve ₹ 60,000 ₹ ₹ By Int. on Capital ₹ 9,000 ₹ ₹ By Share in Profit ₹ 35,000 ₹ ₹ By Goodwill Share ₹ 2,00,000 ------------------------------------------------------------ Total ₹ 6,04,000 ₹ Total ₹ 6,04,000 \end{verbatim}