Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2103, their Balance Sheet was as under: Virad died on 1st October, 2013. It was agreed between his executors and the remaining partners that: (i) Goodwill of the firm be valued at 2 years purchase of average profits for the last three years. The average profits were ₹ 1,50,000. (ii) Interest on capital be provided at 10% p.a. (iii) Profits for the 2013-14 be taken as having accrued at the same rate as that of the previous year which was ₹ 1,50,000. Prepare Virad’s Capital Account to be presented to his Executors as on 1st October, 2013.

Virad, Vishad and Roma were partners in a firm sharing profits in the

1.	Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2103, their Balance Sheet was as under: Virad died on 1st October, 2013. It was agreed between his executors and the remaining partners that: (i) Goodwill of the firm be valued at 2 years purchase of average profits for the last three years. The average profits were ₹ 1,50,000. (ii) Interest on capital be provided at 10% p.a. (iii) Profits for the 2013-14 be taken as having accrued at the same rate as that of the previous year which was ₹ 1,50,000. Prepare Virad’s Capital Account to be presented to his Executors as on 1st October, 2013.
Answer» tion:Working Notes:Calculation of Gaining RATIO of Vishad and Roma:OLD Ratio (Virad, Vishad and Roma) = 5: 3 : 2New Ratio (Vishad and Roma) = 3: 2Gaining Ratio = New Ratio - Old RatioGaining Ratio (Vishad and Roma) = 3: 21. Calculation of Virad's Share of Goodwill:Goodwill = Goodwill Virad's = Virads share of goodwill is to be distributed between Ushad and Roma in their = 3: 2 (Gaining Ratio)Vishad = Roma = 2. Calculation of Profit share of Virad: Profit for the year = Virad's Profit = 3. Calculation of INTEREST on Virad's Capital:Virad's Capital =3,00,0004. Virad's share Reserve FUND:Reserve Fund =

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