Question

Virad,Vishad and Roma were partners in a firm sharing profits in the ratio of $5:3:2$ respectively. On March $31,2013$, their Balance Sheet was as under :
Virad died on October $1,2013$. It was agreed between his executors and the remaining partner's that :
(a) Goodwill of the firm be valued $2\frac{1}{2}$ years purchase of average profit for the last three years.The average profit were $Rs.1,50,000$
(b) interest on capital be proveded at $10\%$ p.a
(c) Profit for the year $2013-14$ be taken as having accrued at the same rate as that of the previous year which was $Rs.1,50,000$ Prepare Virad's Capital Account to be presented to his Executors as on $October,,2013$

Answer 1

Calculation of Gaining Ratio of Vishad and Roma:
Virad: Viashad: Roma
old Ratio=$5:3:2$
New Ratio= $3:2$
Gaining Ratio = New Ratio- Old Ratio
Vishad's Gain =$\frac{3}{5}-\frac{3}{10}=\frac{3}{10}$
Roma's Gain= $\frac{2}{5}-\frac{2}{10}=\frac{2}{10}$
gaining ratio =$3:2$
WN1:Calculation of Virad's Share of Goodwill:
Goodwill of firm $=$ Average Profit $\times$ Number of Year's Purchase
Goodwill of the Firm $=1,50,000\times 2\frac{1}{2}=Rs.3,75,000$
Share of Goodwill of Virad $=3,75,000\times \frac{5}{10}=Rs1,87,500$
Vishad will give $=1,87,500\times \frac{3}{5}=Rs1,12,500$
Roma will give $=1,87,500\times \frac{2}{5}=Rs.75,000$
WN2:Calculation of profit share or Virad :
Profit for the year =$Rs.1,50,000$
Virad's Share of profit $=1,50,000\times \frac{6}{12}\times \frac{5}{10}=Rs.37,500$
WN3: Calculation of interest on Virad's Capital:
Virad's Capital $=3,00,000$
Interest on capital $=3,00,000\times \frac{6}{12}\times \frac{10}{100}=Rs.15,000$
WN4:Virad share of Reserve Fund:
Share of reserve Fund $=60,000\times \frac{5}{10}=Rs.30,000$.