| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Bills Payable | 2,000 | Cash at Bank | 5,800 |
| Employees’ Provident Fund | 5,000 | Bills Receivable | 800 |
| Workmen Compensation Reserve | 6,000 | Stock | 9,000 |
| General Reserve | 6,000 | Sundry Debtors | 16,000 |
| Loans | 7,100 | Furniture | 2,000 |
| Capital A/c : | Plant and Machinery | 6,500 | |
| X – 22,750 | Building | 30,000 | |
| Y – 15,250 | Advertising Suspense | 6,000 | |
| Z – 12,000 | 50,000 | ||
| 76,100 | 76,100 |
The profit-sharing ratio was 3: 2: 1. Z died on 31st July, 2020. The Partnership Deed provides that:
(a) Goodwill is to be calculated on the basis of three years’ purchase of the five years’ average profit. The profits were: 2020: Rs. 24,000; 2019: Rs. 16,000; 2018: Rs. 20,000 and 2017: Rs. 10,000 and 2016: Rs. 5,000.
(b) The deceased partner to be given share of profits till the date of death on the basis of profits for the previous year.
(c) The Assets have been revalued as: Stock Rs. 10,000; Debtors Rs. 15,000; Furniture Rs. 1,500; Plant and Machinery Rs. 5,000; Building Rs. 35,000. A Bill Receivable for Rs. 600 was found worthless.
(d) A Sum of Rs. 12,233 was paid immediately to Z’s Executors and the balance to be paid in two equal annual instalments together with interest @ 10% p.a. on the Amount outstanding.
Give Journal entries and show the Z’s Executors’ Account till it is finally settled.
SOLUTION
