Ashok, Mayank and Mamta were partners in a firm sharing profits in the ratio of 4 : 3 : 1. The firm closes its books on 31st March every year. On 1st February, 2023, Mayank died and it was decided that the new profit sharing ratio between Ashok and Mamta will be equal. The Partnership Deed provided for the following on the death of a partner:

(a) His share of goodwill is to be calculated on the basis of half of the profits credited to his account during the precious four completed years.

The firm’s profits for the last four years ended 31st March, were:

2019 – ₹ 1,50,000, 2020 – ₹ 50,000, 2021 – ₹ 40,000, and 2022 – ₹ 80,000.

(b) His share of profit in the year of his death was to be computed on the basis of average profit of past two years.

Pass necessary Journal entries for goodwill and profit to be transferred to Mayank’s Capital Account.

Anurag Pathak Changed status to publish February 13, 2024
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