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Retirement and Death of a Partner 4.37
BALANCE SHEET OF KHANNA AND SETH as at 1st August, 2018

Liabilities ` Assets `
Trade Creditors 1,33,900 Unexpired Insurance 5,000
Mehta’s Executor’s A/c 1,00,000 Patents 2,00,000
Profit and Loss Suspense A/c 5,000 Machinery 1,75,000
Employees’ Provident Fund 20,000 Stock 30,000
Provision for Outstanding Legal Charges 5,000 Sundry Debtors 62,000
Workmen Compensation Claim 10,000 Less: Provision for Doubtful Debts 3,100 58,900
Khanna’s Capital 1,63,125 Cash at Bank 1,01,000
Seth’s Capital 1,32,875 2,96,000
5,69,900 5,69,900

Dr. MEHTA’S EXECUTOR’S ACCOUNT Cr.
Date Particulars ` Date Particulars `
2018 2018
Aug. 1 To Bank A/c 24,000 Aug. 1 By Mehta’s Capital A/c 1,24,000
2019 2019
Jan. 31 To Bank A/c 30,000 Jan. 31 By Interest A/c 5,000
(` 25,000 + ` 5,000) (` 1,00,000 × 6/12 × 10/100)
Mar. 31 To Balance c/d 76,250 Mar. 31 By Interest A/c (Accrued) 1,250
(` 75,000 + ` 1,250) (` 75,000 × 2/12 × 10/100)
1,30,250 1,30,250

2019 2019
July 31 To Bank A/c 28,750 April 1 By Balance b/d 76,250
(` 25,000 + ` 1,250 + ` 2,500) July 31 By Interest A/c 2,500
(` 75,000 × 4/12 × 10/100)
2020 2020
Jan. 31 To Bank A/c 27,500 Jan. 31 By Interest A/c 2,500
(` 25,000 + ` 2,500) (` 50,000 × 10/100 × 6/12)
Mar. 31 To Balance c/d 25,417 Mar. 31 By Interest A/c 417
(` 25,000 + ` 417) (` 25,000 × 10/100 × 2/12)
81,667 81,667
2020 2020
July 31 To Bank A/c 26,250 April 1 By Balance b/d 25,417
(` 25,000 + ` 417 + ` 833) July 31 By Interest A/c 833
(` 25,000 × 10/100 × 4/12)
26,250 26,250
Working Notes:
1. Mehta’s Share of Goodwill:
` 505 000, , + ` 70 000, + ` 90 000, − ` 375 000, ,
Firm’s Goodwill = × 25 . = ` 1,75,000
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2
Mehta’s Share of Goodwill = ` 1,75,000 × = ` 35,000.
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