wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

P, Q and R were partners in a firm sharing profits in 2 : 2 : 1 ratio. The Partnership Deed provided that on the death of a partner his executors will be entitled to the following:
(a) Interest on Capital @ 12% p.a.
(b) Interest on Drawings @ 18% p.a.
(c) Salary of ₹ 12,000 p.a.
(d) Share in the profit of the firm (up to the date of death) on the basis of previous year's profit.
P died on 31st May, 2018. His capital was ₹ 80,000. He had withdrawn ₹ 15,000 and interest on his drawings was calculated as ₹ 1,200. Profit of the firm for the previous year ended 31st March, 2018 was ₹ 30,000.
Prepare P's Capital Account to be rendered to his executors.

Open in App
Solution

P’s Capital Account
Dr.
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Drawings A/c
15,000
Balance b/d
80,000
Interest on Drawings A/c
1,200
Interest on Capital A/c
1,600
P’s Executor’s A/c
69,400
Salary (12,000 × 2/12)
2,000
Profit and Loss Suspense A/c
2,000
85,600
85,600


Working Notes:

WN 1 Calculation of Interest on Capital

P’s Capital Balance = Rs 80,000

Interest on Capital (for 2 months)

WN 2 Calculation of P’s Share of Profit

Profit for last year = Rs 30,000

∴ P’s Share of Profit (for 2 Months)

flag
Suggest Corrections
thumbs-up
25
similar_icon
Similar questions
View More
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Appropriation vs Charge
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon