Page 119 - ISCDEBK-12

Death of a Partner 5.17

(iv) Claim on account of Workmen Compensation is ` 10,000.
(v) Investments be sold for ` 21,000 and a sum of ` 24,000 be paid to Vicky’s Executors immediately. The
remainder to be paid in four equal half-yearly instalments together with interest @ 10% p.a.
You are required:
(a) to give the necessary Journal entries to be passed on Vicky’s death;
(b) to prepare the Capital Accounts of all the partners;
(c) to prepare the Balance Sheet of Micky and Ricky immediately after Vicky’s death;
(d) to prepare Vicky’s Executor’s Account till it is finally settled.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2019
Aug 1 Micky’s Capital A/c ...Dr. 12,500
Ricky’s Capital A/c ...Dr. 7,500
Vicky’s Capital A/c ...Dr. 5,000
To Goodwill A/c 25,000
(Being the existing goodwill written off)
Micky’s Capital A/c (` 35,000 × 5/8) ...Dr. 21,875
Ricky’s Capital A/c (` 35,000 × 3/8) ...Dr. 13,125
To Vicky’s Capital A/c (` 1,75,000 × 2/10) 35,000
(Being Vicky’s share of goodwill adjusted)
Vicky’s Capital A/c ...Dr. 5,000
To Profit and Loss Suspense A/c 5,000
(Being Vicky’s share of loss to date of death recorded)
Investment Fluctuation Reserve A/c ...Dr. 17,500
To Micky’s Capital A/c 8,750
To Ricky’s Capital A/c 5,250
To Vicky’s Capital A/c 3,500
(Being the transfer of Investment Fluctuation Reserve)
Workmen Compensation Reserve A/c ...Dr. 17,500
To Workmen Compensation Claim A/c 10,000
To Micky’s Capital A/c 3,750
To Ricky’s Capital A/c 2,250
To Vicky’s Capital A/c 1,500
(Being the transfer of Workmen Compensation Reserve)
Micky’s Capital A/c ...Dr. 2,500
Ricky’s Capital A/c ...Dr. 1,500
Vicky’s Capital A/c ...Dr. 1,000
To Advertisement Expenditure A/c 5,000
(Being the transfer of Advertisement Expenditure)
Micky’s Capital A/c ...Dr. 1,87,500
Ricky’s Capital A/c ...Dr. 1,12,500
Vicky’s Capital A/c ...Dr. 75,000
To Profit and Loss A/c 3,75,000
(Being the transfer of Accumulated Loss)