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Chapter 7 Death of a Partner 7.7
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Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Stock A/c 16,000 By Land and Building A/c 50,000
To Provision for Doubtful Debts A/c 10,000
To Gain (Profit) on Revaluation transferred to:
X’s Capital A/c 8,000
Y’s Capital A/c 12,000
Z’s Capital A/c 4,000 24,000
50,000 50,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars X (`) Y (`) Z (`) Particulars X (`) Y (`) Z (`)
To Goodwill A/c 8,000 12,000 4,000 By Balance b/d 2,00,000 4,00,000 6,00,000
To Y’s Capital A/c 36,000 ... ... By X’s Capital A/c ... 36,000 60,000
(Goodwill) (Goodwill)
To Z’s Capital A/c 60,000 ... ... By Revaluation A/c 8,000 12,000 4,000
(Goodwill) (Gain)
To Adv. Susp. A/c 8,000 12,000 4,000 By Work. Com. Res. A/c 8,000 12,000 4,000
To Z’s Executors’ A/c ... ... 6,62,000 By Inv. Fluc. Res. A/c 4,000 6,000 2,000
To Balance c/d 1,08,000 4,42,000 ...
2,20,000 4,66,000 6,70,000 2,20,000 4,66,000 6,70,000

BALANCE SHEET as at 1st April, 2018
Liabilities ` Assets `
X’s Capital 1,08,000 Land and Building 5,50,000
Y’s Capital 4,42,000 5,50,000 Investments 92,000
Z’s Executors’ A/c (WN 3) 3,31,000 Stock 1,44,000
Creditors 7,20,000 Debtors 6,00,000
Workmen Compensation Claim 16,000 Less: Provision for Doubtful Debts 30,000 5,70,000
Bank 2,61,000
16,17,000 16,17,000
Working Notes:
1. Calculation of Gain/(Sacrifice) of Share:
New Share Old Share Difference
X 3/5 2/6 3/5 – 2/6 = 8/30 (Gain)
Y 2/5 3/6 2/5 – 3/6 = – 3/30 (Sacrifice)
2. Calculation of Goodwill:
` 90,000 + 1,80,000 + 2,70,000` `
(i) Average Profit = = ` 1,80,000.
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(ii) Firm's Goodwill = ` 1,80,000 × 2 = ` 3,60,000.
(iii) Z’s share in Goodwill = ` 3,60,000 × 1/6 = ` 60,000.
Since, Y is sacrificing 3/30 of his share of profit, therefore, X will also compensate Y proportionately by
` 36,000 (i.e., ` 3,60,000 × 3/30).
3.
Dr. Z’S EXECUTORS’ ACCOUNT Cr.
Particulars ` Particulars `
To Bank A/c 3,31,000 By Z’s Capital A/c 6,62,000
To Balance c/d 3,31,000
6,62,000 6,62,000