Puneet, Pankaj and Pammy are partners in a business sharing profits and losses in the ratio of 2:2:1 respectively. Their balance sheet as on March 31, 2017 was as follows:
Books of Puneet, Pankaj and Pammy
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Balance Sheet as on March 31, 2017
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Liabilities |
Amount Rs |
Assets |
Amount Rs |
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Sundry Creditors |
1,00,000 |
Cash at Bank |
20,000 |
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Capital Accounts: |
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Stock |
30,000 |
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Puneet |
60,000 |
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Sundry Debtors |
80,000 |
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Pankaj |
1,00,000 |
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Investments |
70,000 |
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Pammy |
40,000 |
2,00,000 |
Furniture |
35,000 |
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Reserve |
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50,000 |
Buildings |
1,15,000 |
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3,50,000 |
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3,50,000 |
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Mr. Pammy died on September 30, 2017. The partnership deed provided the following:
(i) |
The deceased partner will be entitled to his share of profit up to the date of death calculated on the basis of previous year’s profit. |
(ii) |
He will be entitled to his share of goodwill of the firm calculated on the basis of 3 years’ purchase of average of last 4 years’ profit. The profits for the last four financial years are given below: for 2013–14; Rs 80,000; for 2014–15, Rs 50,000; for 2015–16, Rs 40,000; for 2016–17, Rs 30,000. The drawings of the deceased partner up to the date of death amounted to Rs 10,000. Interest on capital is to be allowed at 12% per annum. Surviving partners agreed that Rs 15,400 should be paid to the executors immediately and the balance in four equal yearly instalments with interest at 12% p.a. on outstanding balance. Show Mr. Pammy’s Capital account, his Executor’s account till the settlement of the amount due. |