X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2022, their Balance Sheet was as follows:
X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2022, their Balance Sheet was as follows:
| Liabilities | ₹ | Assets | ₹ |
| Trade Creditors
Bills Payable General Reserve Capital A/cs: X Y Z |
1,20,000 80,000 60,000 7,00,000 7,00,000 60,000 |
Cash at Bank
Stock Sundry Debtors Building Advance to Y Profit & Loss A/c |
1,80,000 1,40,000 80,000 3,00,000 7,00,000 3,20,000 |
| 17,20,000 | 17,20,000 |
Y died on 30th June, 2022. Partnership Deed provided for the 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, 2022, 31st March, 2021, 31st March, 2020, 31st March, 2019 and 31st March, 2018 were ₹ 3,20,000 (Loss); ₹ 1,00,000; ₹ 1,60,000; ₹ 2,20,000 and ₹ 4,40,000 respectively.
(ii) Y’s share of profit or loss from 1st April, 2022 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2022.
You are required to calculate the following:
a) Goodwill of the firm and Y’s share of goodwill at the itme of his death.
b) Y’s share in the profit or loss of the firm till the date of his death.
c) Prepare Y’s Capital Account at the time fo his death to be presented to his executors.
Anurag Pathak Changed status to publish July 26, 2023
