Dear Teachers,
These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter - 3
Reconstitution of a Partnership Firm
Death of a Partner
Calculation of amount due to deceased partner
The accounting treatment in the event of death of a partner is similar to that in case of retirement of a partner.
Death of a Partner
The retirement normally takes place at the end of an accounting period, the death of a partner may occur any time. Hence, in case of a partner, his claim shall also include his share of profit or loss, interest on capital, interest on drawings (if any) from the date of the last Balance Sheet to the date of his death.
Death of a Partner
In case of death of a partner his claim is transferred to his executors and settled in the same manner as that of the retired partner.
Death of a Partner
Calculation of deceased partner’s share of profit up to the date of death
On the basis of last year’s profit
Or on the basis of average of past few years
Or on the basis of sales
Based on last year’s profit
A,B and C were partners in a firm sharing profits in the ratio of 5:4:1. The profit of the firm for the year ending on March 31, 2017 was Rs.1,00,000. B dies on June 30, 2017. Calculate share of B’s share of profit for the period from April 1 to June 30, 2017.
Total profit for the year ending
on 31 st March, 2017 = 1,00,000
B’s share of profit = 1,00,000 x 3/12 x 4/10
= 10,000
The journal entry will be recorded as follows :
Profit & Loss Suspense A/c Dr. 10,000
To B’s Capital A/c 10,000
(B’s share of profit transferred to his capital account)
Based on average profits of past few years
A,B and C were partners in a firm sharing profits in the ratio of 5:4:1. The profit of the firm for the last three years were Rs. 1,36,000 for 2014-15, Rs. 1,54,000 for 2015-16 and Rs. 1,00,000 for 2016-17. B dies on June 30, 2017. Calculate share of B’s share of profit for the period from April 1 to June 30, 2017.
Average Profit = Total Profit / No. of years
= (1,36,000 + 1,54,000 + 1,00,000) / 3
= 3,90,000 / 3
= 1,30,000
B’s share of profit = 1,30,000 × 3/12 x 4/10
= 13,000
The journal entry will be recorded as follows :
Profit & Loss Suspense A/c Dr. 13,000
To B’s Capital A/c 13,000
Based on Sales
A,B and C were partners in a firm sharing profits in the ratio of 5:4:1. Sales during the year 2016-17 were Rs. 8,00,000 and profit Rs. 2,00,000. The sales from April 1, 2017 to 30th June were Rs. 1,00,000. Calculate B’s share of profits for the period from April 1, 2017 to June 30, 2017.
If sale is Rs.8,00,000, the profit = 2,00,000
Profit % = 2,00,000 x 100 = 25%
8,00,000
If sale is Rs. 1,00,000, the profit = 1,00,000 x 25% = 25,000
B’s Share of profit = 25,000 x 4/10 = 10,000
The journal entry will be recorded as follows :
Profit & Loss Suspense A/c Dr. 10,000
To B’s Capital A/c 10,000
Anil, Bhanu and Chandu were partners in a firm sharing profits in the ratio of 5:3:2. On March 31, 2017, their Balance Sheet was as under:
Liabilities Amount
Creditors 11000
General Reserve 6000
Capital :
Anil 30000
Bhanu 25000
Chandu 15000
87000
Assets Amount
Building 20000
Machinery 30000
Stock 10000
Patents 11000
Debtors 8000
Cash 8000
87000
Balance Sheet
Anil died on October 1, 2017. It was agreed between his executors and the remaining partners that :
(1) Goodwill to be valued at Rs. 37,500
(2) Patents be valued at Rs.8,000; Machinery at Rs.28,000; and Building at Rs.25,000
(3) Profit for the year 2017-18 be taken as having accrued at the same rate as that of
the previous year 2016-17 – Rs.15,000
Prepare Anil’s Capital Account and Anil’s Executor’s Account as on October 1, 2017
(4) Interest on capital be provided at 10% p.a.
(5) Half of the amount due to Anil be paid immediately
Calculation Anil’s Share of goodwill :-
Old Ratio = 5:3:2
Goodwill of the firm = 37,500
Anil’s share of goodwill = 37,500 x 5/10 = 18,750
Gaining Ratio = 3:2
Journal entry for G/W:
Bhanu‘s capital A/C Dr. 11250 (18750 x 3/5)
Chandu’s Capital A/C Dr. 7500 (18750 x 2/5)
To Anil’s capital 18750
(1) Goodwill to be valued at Rs. 37,500
Anil, Bhanu and Chandu were partners in a firm sharing profits in the ratio of 5:3:2.
Amount
Particulars
Amount
Particulars
Patents (11000 - 8000)
3,000
Machinery (30000 - 28000)
2,000
5,000
5,000
REVALUATION ACCOUNT
Building (25000 - 20000)
5,000
(2) Patents be valued at Rs.8,000; Machinery at Rs.28,000; and Building at Rs.25,000
Amount
Particulars
Balance b/d
3,000
ANIL’S CAPITAL ACCOUNT
Date
01/10/17
Amount
Particulars
Date
General Reserve
(6000 x 5/10)
Bhanu’s Capital A/c
30,000
11,250
Chandu’s Capital A/c
Bhanu‘s capital A/C Dr. 11250
Chandu’s Capital A/C Dr. 7500
To Anil’s capital 18750
7,500
Amount
Particulars
Balance b/d
3,000
ANIL’S CAPITAL ACCOUNTS
Date
01/10/17
Amount
Particulars
Date
General Reserve
(6000 x 5/10)
Bhanu’s Capital A/c
30,000
11,250
Chandu’s Capital A/c
P & L Suspense A/c
(15000 x 6/12 x 5/10)
7,500
3,750
(3) Profit for the year 2017-18 be taken as having accrued at the same rate as that of
the previous year 2016-17 – Rs.15,000
Amount
Particulars
Balance b/d
3,000
ANIL’S CAPITAL ACCOUNTS
Date
01/10/17
Amount
Particulars
Date
General Reserve
(6000 x 5/10)
Bhanu’s Capital A/c
57,000
57,000
Anil’s Executor’s A/c
57,000
30,000
11,250
Chandu’s Capital A/c
P & L Suspense A/c
(15000 x 6/12 x 5/10)
01/10/17
7,500
3,750
(4) Interest on capital be provided at 10% p.a.
Interest on capital
(30000 x 10% x 6/12)
1,500
Amount
Particulars
Anil’s Capital A/c
ANIL’S EXECUTOR’S ACCOUNT
Date
01/10/17
Amount
Particulars
Date
Bank A/c
57,000
57,000
Balance c/d
28,500
57,000
28,500
01/10/17
01/10/17
Amount
Particulars
Balance b/d
3,000
ANIL’S CAPITAL ACCOUNTS
Date
01/10/17
Amount
Particulars
Date
General Reserve
(6000 x 5/10)
Bhanu’s Capital A/c
57,000
57,000
Anil’s Executor’s A/c
57,000
30,000
11,250
Chandu’s Capital A/c
P & L Suspense A/c
(15000 x 6/12 x 5/10)
01/10/17
7,500
3,750
Interest on capital
(30000 x 10% x 6/12)
1,500
Drawings
Interest on drawings
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.