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Karam, Sunil and Mahesh were partners in a firm sharing profits in the ratio of 3 : 2 : 5. On 31st March, 2023, their Balance Sheet was as follows:

Liabilities   Assets

Capital A/cs:

Karam

Sunil

Mahesh

General Reserve

Loan from Sunil

Creditors

 

3,00,000

2,00,000

5,00,000

 

 

 

10,00,000

1,00,000

50,000

75,000

Goodwill

Land and Building

Machinery

Stock

Debtors

Cash

Profit & Loss Account

3,00,000

5,00,000

1,70,000

30,000

1,20,000

45,000

60,000

    12,25,000   12,25,000

On 12th June, 2023 Sunil died. The Partnership Deed provided that on the death of a partner the executor of the deceased partner is entitled to:

(i) Balance in Capital Account:

(ii) Share in profits up to the date of death on the basis of last year’s profit:

(iii) His share in profit/loss on revaluation of assets and re-assessment of liabilities which were as follows:

(a) Land and Buildings was to be appreciated by ₹ 1,20,000.

(b) Machinery was to be decreased to ₹ 1,35,000 and Stock to ₹ 25,000.

(c) A provision of 2 and 1/2% for Doubtful Debts was to be created on debtors.

Amount payable to Sunil’s Executors was transferred to his loan account which was to be paid later.

Prepare Revaluation Account, Partner’s Capital Account, Sunil’s Executor’s Account, and the Balance Sheet of Karam and Mahesh who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus or deficit to be transferred to Current Accounts of the partners.

Anurag Pathak Changed status to publish February 16, 2024
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