Karan, Prateek and Umang were partners in a firm sharing profits in the ratio of 2: 2: 1. On 31st March, 2025, their Balance Sheet was as follows:
Karan, Prateek and Umang were partners in a firm sharing profits in the ratio of 2: 2: 1. On 31st March, 2025, their Balance Sheet was as follows:
| Liabilities | ₹ | Assets | ₹ |
| Trade Creditors | 2,00,000 | Cash at Bank | 1,80,000 |
| General Reserve | 60,000 | Stock | 1,40,000 |
|
Capital A/cs: Karan Prateek Umang |
7,00,000 7,00,000 60,000 |
Sundry Debtors | 80,000 |
| Â | Â | Building | 3,00,000 |
| Â | Â | Advance to Prateek | 7,00,000 |
| Â | Â | Profit & Loss A/c | 3,20,000 |
| Â | 17,20,000 | Â | 17,20,000 |
Prateek died on 30th June, 2025. Partnership Deed provided for following on the death of a partner:
(i) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2025, 31st March, 2024, 31st March, 2023, 31st March, 2022 and 31st March, 2021 were ₹ 3,20,000 (Loss); ₹ 1,00,000, ₹ 1,60,000 ₹ 2,20,000 and 4,40,000 respectively.
(ii) Prateek’s share of profit or loss from 1st April, 2025 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2025.
You are required to calculate the following:
(a) Goodwill of the firm and Prateek’s share of goodwill at the time of his death. (b) Prateek’s share in the profit or loss of the firm tillthe date of his death. (c) Prepare Prateek’s Capital Account at the time of his death to be presented to his executors.
[Ans.: Amount due from Prateek’s Executors- 40,000; Prateek’s Share of Goodwill 96,000.]
Solution:-
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