[ISC] Q. 12 Death of Partner Solution TS Grewal Class 12 (2023-24)

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Solution to Question number 12 of the Death of Partner Chapter of TS Grewal Book ISC Board 2023-24 Edition?

Rajiv, Shail and Trilok were partners sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2023, their Balance Sheet stood as under:

LiabilitiesAssets
Sundry Creditors
Reserve Fund
Capital A/cs:
Rajiv
Shail
Trilok
55,000
30,000
1,50,000
1,25,000
75,000
Goodwill
Leashold
Patents
Machinery
Stock
Debtors
Cash at Bank
25,000
1,00,000
30,000
1,50,000
50,000
40,000
40,000
4,35,0004,35,000

Trilok died on 1st August, 2023. It was agreed that:

(i) Goodwill be valued at 2 and 1/2 years purchase of the last 4 year’s average profit which for the year ended 31st March, were:

2020 – ₹ 65,000; 2021 – ₹ 60,000; 2022 – ₹ 80,000 and 2023 – ₹ 75,000.

(ii) Machinery be valued at ₹ 1,40,000; Patents be valued at ₹ 40,000; Leasehold be valued at ₹ 1,25,000 on 1st August, 2023.

(iii) For the purpose of calculating Trilok’s share in the profit up to the date of death, profit for the year ended 31st March, 2024 shall be taken to have accrued on the same scale as in the year ended 31st March, 2023.

(iv) ₹ 21,000 to be paid immediately to the executors of Trilok and the balance was to be paid in four equal half-yearly instalments together with interest @ 10% p.a.

Pass necessary Journal entries to record the above transactions and Trilok’s Executors Account for the year.

Solution:-

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Anurag Pathak
Anurag Pathak

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