Question

Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2013, their Balance Sheet was as under:

Liabilities		₹	Assets		₹
Capital A/cs:			Buildings		2,00,000
Virad	3,00,000		Machinery		3,00,000
Vishad	2,50,000		Patents		1,10,000
Roma	1,50,000	7,00,000	Stock		1,00,000
Reserve Fund		60,000	Debtors		80,000
Creditors		1,10,000	Cash		80,000
		8,70,000			8,70,000

​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^{\raisebox{1ex}{$1$}\!\left/ \!\raisebox{-1ex}{$2$}\right.}$ 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 1

Virad’s Capital Account
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
			Balance b/d	3,00,000
Executor’s A/c		5,70,000	Vishad’s Capital A/c	1,12,500
			Roma’s Capital A/c	75,000
			Profit and Loss Suspense A/c	37,500
			Reserve Fund	30,000
			Interest on Capital	15,000
		5,70,000		5,70,000

Calculation of Gaining Ratio of Vishad and Roma:

WN1: Calculation of Virad’s Share of Goodwill:

WN2: Calculation of Profit share of Virad:

WN3: Calculation of Interest on Virad ‘s Capital:

WN4: Virad’s share of Reserve fund: