Page 172 - DEBKVOL-1

7.14 Double Entry Book Keeping—CBSE XII
average profits of the last three years. Goodwill was to be calculated on the basis of three times
the average profits of the last four years. The profits for the years ended 2009–10, 2010–11 and
2011–12 were ` 30,000, ` 70,000 and ` 80,000 respectively.
Prepare Punita’s Capital Account to be rendered to her executors. (Sample Paper 2015)
Solution:
Dr. PUNITA’S CAPITAL ACCOUNT Cr.
Particulars ` Particulars `
To Bank A/c (Drawings) 44,000 By Balance b/d 1,44,000
To Profit and Loss A/c (` 60,000 × 2/5) 24,000 By Interest on Capital A/c (WN 1) 4,880
To Punita’s Executors’ A/c 1,22,880 By Profit and Loss Suspense A/c (WN 2) 6,000
(Balancing Figure) By Rashi’s Capital A/c (WN 3) 12,000
By Seema’s Capital A/c (WN 3) 24,000
1,90,880 1,90,880
Working Notes:
1. Interest on Capital = ` 1,44,000 × 8/100 × 3/12 = ` 2,880
= ` 1,00,000 × 8/100 × 3/12 = ` 2,000
Total = ` 4,880

( 70,000 + 80,000 ` ` - 60,000)`
2. Punita’s Share in Profit till Death = × 6/12 × 2/5 = ` 6,000.
3
`
` 30,000 + 70,000 + 80,000 – 60,000
`
`
3. Value of Firm’s Goodwill = × 3 = ` 90,000.
4
Punita’s Share in Goodwill = ` 90,000 × 2/5 = ` 36,000, which is contributed by Rashi and
Seema in their gaining ratio, i.e., 1 : 2.
Illustration 11.
Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On
31st March, 2014, their Balance Sheet was as follows:
Liabilities ` Assets `
Capital A/cs: Building 1,04,000
Dev 77,000 Inventory 16,000
Swati 87,000 Trade Receivables 23,000
Sanskar 46,000 2,10,000 Cash 40,000
Trade Payables 17,000 Profit and Loss A/c 57,000
Bank Loan 13,000
2,40,000 2,40,000
On 30th June, 2014 Dev died. According to partnership agreement, Dev was entitled to
interest on capital at 12% per annum. His share of profit till the date of his death was to
be calculated on the basis of the average profits of last four years. The profits of the last
four years were:
Year 2010–11 2011–12 2012–13 2013–14
Profit (`) 2,04,000 1,80,000 90,000 (57,000) Loss

On 1st April, 2014, Dev withdrew ` 15,000 to pay for his medical bills.
Prepare Dev’s Account to be presented to his executors. (Delhi 2015)