26 :- Iqbal and Kamal are in partnership sharing profits and losses in 3:2. Kamal died three months after the date of the last Balance sheet. According to the partnership Deed, his legal heir is entitled to the following:
(a) His capital as per the last balance sheet.
(b) Interest on above capital @3% p.a. till the date of death.
(c) His share of profit till the date of death calculated on the basis of last year’s profit.
His drawings are to bear interest at an average of 2% on the amount irrespective of the period.
The net profits for the last three years, after charging insurance premium, were Rs 20,000; Rs 25,000 and Rs 30,000 respectively. Kamal’s capital as per balance sheet was Rs 40,000 and his drawings till the date of death were Rs 5,000.
Draw Kamal’s capital account to be rendered to his representative.
Solution :-
WORKING NOTES :-
(i) Calculation of interest on Kamal’s capital
= 40,000 x 3/12 x 3/100
= Rs 300
(ii) Calculation of Kamal’s share of profit
Profit for the year = Rs 30,000
Kamal’s share in profit
= 30,000 x 3/12 x 2/5
= Rs 3,000