Q9
Q9. Nisha and Saisha were partners. The partnership deed provided for the following
a) Profit to be divided as 1/2 , 1/3 and 1/6 transferred to reserves.
b) The account are closed on 31st march every year.
c) In the event of the death of a partner, the executor will be entitled to the following.
Interest on capital @ 12% p.a.
His proportion of profit to the date of death based on the average profit for the last 3 years.
Share of goodwill based on 3 years purchase of the average profits of the preceding 3 years.
Additional information
Nisha capital 3,60,000; saisha's capital 2, 40,000; reserves 90,000; cash 3,30,000 and investment 2,10,000.
Prepare Nisha's capital account to be presented to her executor who died on 30th april, 2016. The profit for the 3 years were 2, 52,000, 2,70,000 and 2,97,000.
Dear Student
PSR between Nisha and Saisha is 3:5.
Regards
| Nisha's Capital A/c | |||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
| Cash | Bal B/d | 360,000 | |||
| Reserve (90,000 x 3/5) | 54,000 | ||||
| Profit and Loss suspense A/c | 13,650 | ||||
| Saisha's Capital A/c | 491,400 | ||||
| Nisha's Executors A/c | 922,650 | ||||
| Interest on Capital (3,60,000 x 12% x 1/12) | 3,600 | ||||
| 922,650 | 922,650 | ||||
| Calculation of Average profit and Share of Nisha | |
| Year | Total Profits |
| Year 1 | 252,000 |
| Year 2 | 270,000 |
| Year 3 | 297,000 |
| Total | 819,000 |
| Average profit | 273,000 |
| Profit for 1 month | 22,750 |
| Share of Nisha (22,750 x 3/5) | 13,650 |
| Adjustmentof Goodwill | ||
| Year | Total Profits | |
| Year 1 | 252,000 | |
| Year 2 | 270,000 | |
| Year 3 | 297,000 | |
| Total | 819,000 | |
| Average profit | 273,000 | - |
| Goodwill @ 3years purchase | 819,000 | |
| Gaining Ratio | The whole share is gained by Saisha | |
| Goodwill Adjustment for Nisha | ||
| Nisha's Share to be adjusted from Saisha's Capital A/c | (8,19,000 x 3/5) | 4,91,400 |
PSR between Nisha and Saisha is 3:5.
Regards