R, S and T were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On 31st March, 2018, Their Balance Sheet stood as: T died on 1st August, 2018. It was agreed that: (a) Goodwill be valued at 2 years purchase of average of last 4 years profits which were: 2014-15: ₹ 60,000; 2016-17: ₹ 80,000 and 2017-18: ₹ 75,000. (b) Machinery be valued at ₹ 1,40,000; Patents be valued at ₹ 40,000; Leasehold be valued at ₹ 1,25,000 on 1st August, 2018. (c) For the purpose of calculating T’s share in the profits of 2018-19, the profits in 2018-19 should be taken to have accrued on the same scale as in 2017-18. (d) A sum of ₹ 21,000 to be paid immediately to the Executors of T and the balance to be paid in four equal half-yearly installments together with interest @ 10% p.a. Pass necessary journal entries to record the above transactions and T’s Executors Account.

R, S and T were partners sharing profits and losses in the ratio of 5

1.	R, S and T were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On 31st March, 2018, Their Balance Sheet stood as: T died on 1st August, 2018. It was agreed that: (a) Goodwill be valued at 2 years purchase of average of last 4 years profits which were: 2014-15: ₹ 60,000; 2016-17: ₹ 80,000 and 2017-18: ₹ 75,000. (b) Machinery be valued at ₹ 1,40,000; Patents be valued at ₹ 40,000; Leasehold be valued at ₹ 1,25,000 on 1st August, 2018. (c) For the purpose of calculating T’s share in the profits of 2018-19, the profits in 2018-19 should be taken to have accrued on the same scale as in 2017-18. (d) A sum of ₹ 21,000 to be paid immediately to the Executors of T and the balance to be paid in four equal half-yearly installments together with interest @ 10% p.a. Pass necessary journal entries to record the above transactions and T’s Executors Account.
Answer» TION:WORKING Notes:1. Calculation of Goodwill GoodwillGoodwill = 2. Adjustment of Goodwill R : S ; T = 5 : 3 : 2 (OLD Ratio) T's deathGaining Ratio ( R and S ) = 5 : 3.T's share of goodwill is to be distributed between R and S in their =5: 3 (GAINING Ratio)3. Calculation of T's Share of Profit Profit for YEAR(2011 - 12) = Rs 75,000

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