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: Anil died on October 1, 2017. It was agreed between his executors and the remaining partners that :(a)Goodwill to be valued at 1 2 2year’s purchase of the average profits of the previous four years which were : Year 2013-14 – Rs.13,000, Year 2014-15 – Rs. 12,000,Year 2015-16 – Rs.20,000, Year 2016-17 – Rs.15,000 (b) Patents be valued at Rs.8,000, Machinery at Rs.28,000, and Building at Rs.25,000.(c) Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year.(d) Interest on capital be provided at 10% p.a.(e) Half of the amount due to Anil be paid immediately. Prepare Anil’s Capital Account and Anil’s Executor’s Account as on October 1, 2017.

Anil, Bhanu and Chandu were partners in a firm sharing profits in the

1.	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: Anil died on October 1, 2017. It was agreed between his executors and the remaining partners that :(a)Goodwill to be valued at 1 2 2year’s purchase of the average profits of the previous four years which were : Year 2013-14 – Rs.13,000, Year 2014-15 – Rs. 12,000,Year 2015-16 – Rs.20,000, Year 2016-17 – Rs.15,000 (b) Patents be valued at Rs.8,000, Machinery at Rs.28,000, and Building at Rs.25,000.(c) Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year.(d) Interest on capital be provided at 10% p.a.(e) Half of the amount due to Anil be paid immediately. Prepare Anil’s Capital Account and Anil’s Executor’s Account as on October 1, 2017.
Answer» Solution : 2. Goodwill = `2½` years’ purchase `×` Average Profit Average Profit `(Rs. 13,000+Rs.12,000+Rs.20,000+Rs.15,000)/(4)` `=(5)/(2)xxRs. 15,000` `=Rs. 37,500` Anil's Share of Goodwill `=(5)/(10)xxRs. 37,500` Rs. 18,750 3. Profit from the DATE of last balance sheet to date of death (April 1, 2017 to October 1, 2017) = 6 months Profit for 6 months = Rs.`=Rs. 15,000 XX(6)/(12)=Rs. 7,500` Anil's share of profit = Rs. 7,500 `xx(5)/(10)`= Rs. 3,750 4. Interest on Capital (April 1, 2017 to October 1, 2017) = Rs. 30,000 `xx (10)/(100) xx (6)/(12)` = Rs. 1,500

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