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Akhil, Nikhil and Sunil were partners sharing profits and losses equally. Following was their Balance Sheet as at 31st March, 2023:

Liabilities Assets

Trade Creditors

General Reserve

Capital A/cs:

Akhil

Nikhil

Sunil

40,000

45,000

1,95,000

1,20,000

80,000

Building

Plant and Machinery

Stock

Debtors

Cash at Bank

2,00,000

80,000

35,000

80,000

85,000

  4,80,000   4,80,000

Sunil died on 1st August, 2023. The Partnership Deed provided that the deceased partner will be entitled to:

(i) Balance of Partner’s Capital Accounts and his share of accumulated reserve.

(ii) Share of profits from the closure of the last accounting year till the date of death on the basis of the profit of the preceding completed year before death.

(iii) Share of goodwill calculated on the basis of three times the average profit of the last four years.

(iv) Interest on deceased partner’s Capital @ 6% p.a.

(v) ₹ 50,000 to be paid to deceased partner’s executor immediately and the balance to remain in his loan account.

Profits and Losses for the preceding years ended 31st March, were: 2020 – ₹ 80,000 profit; 2021 – ₹ 1,00,000 Loss; 2022 – ₹ 1,20,000 Profit; 2023 – ₹ 1,80,000 Profit.

Pass necessary Journal entries and prepare Sunil’s Capital Account and Sunil’s Executor’s Account.

Anurag Pathak Changed status to publish February 13, 2024
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