30 :- Shirish, Harit and Asha were partners in a firm sharing profits in the ratio of 5:4:1. Shirish died on 30th June 2018. On this date, their balance sheet was follows :
According to the partnership deed, in addition to deceased partner’s capital, his executor is entitled to
(i) Share in profits in the year of death on the basis of average of last two years profit. Profit for the year 2016 -17 was Rs 60,000.
(ii) Goodwill of the firm was to be valued at 2 years purchase of average of last two years profits.
Prepare Shirish’s capital account to be presented to his executor.
Solution :-
WORKING NOTES :-
(i) Shirish share in estimated profit
a. Average profit = (60,000 + 80,000) x 1/2 = Rs 70,000
b.Firm’s estimated profit till date of Shirish death = 70,000 x 3/12
= Rs 17,500
c.Shrish’s share in firm’s estimated profit = 17,500 x 5/10 = Rs 8,750
(ii) Shirish’s share of goodwill
a.Firm’s goodwill = Rs 1,40,000
b.Shirish’s share in goodwill = Rs 1,40,000 x 5/10 = Rs 70,000
c.Harit’s contribution = 70,000 x 4/5 = Rs 56,000
d.Asha’s contribution = 70,000 x 1/5 = Rs 14,000