[ISC] Q. 13 Death of Partner Solution TS Grewal Class 12 (2023-24)

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Solution to Question number 13 of the Death of Partner Chapter of TS Grewal Book ISC Board 2023-24 Edition?

Balance Sheet of Sukhi, Mukhi and Dukhi as at 31st March, 2023 was as follows:

LiabilitiesAssets
Bills Payable
Employees’ Provident Fund
Workmen Compensation Reserve
General Reserve
Capital A/cs:
Sukhi
Mukhi
Dukhi
9,100
5,000
6,000
6,000
22,750
15,250
12,000
Cash at Bank
Bills Receivable
Stock
Sundry Debtors
Furniture
Plant and Machinery
Building
Advertisement Suspense
5,800
800
9,000
16,000
2,000
6,500
30,000
6,000
76,10076,100

The profit-sharing ratio was 3 : 2 : 1. Dukhi died on 31st July, 2023. The partnership Deed provides that:

(i) Goodwill is to be calculated on the basis of 3 years’ purchase of the 5 years’ average profit. The profits for the years ended 31st March 2023, 2022, 2021, 2020 and 2019 were: ₹ 24,000; ₹ 16,000; ₹ 20,000; ₹ 10,000; ₹ 5,000 respectively.

(ii) The deceased partner to be given share of profit up to the date of death on the basis of profits for the previous year.

(iii) The assets have been revalued as under:

Stock ₹ 10,000; Debtors ₹ 15,000; Furniture ₹ 1,500; Plant and Machinery ₹ 5,000; Building ₹ 35,000. A Bill Receivable for ₹ 600 was found worthless.

(iv) ₹ 12,233 was paid immediately to Dukhi’s executors and the balance was to be paid in two equal annual instalments together with interest @ 10% p.a. on the amount outstanding.

Give Journal entries and show Dukhi’s Executors Account till it is finally settled.

Solution:-

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Anurag Pathak
Anurag Pathak

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