Question : P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided under the partnership deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profits credited to his account during the last 4 completed years (books of accounts are closed on 31st March).
R died on 1st April 2018. The firm’s profits for the last 4 years were as follows: 2015 (Profits Rs. 1,20,000); 2016 (Profits Rs.60,000); 2017 (Losses Rs.20,000) and 2018 (Profits Rs. 80,000). Determine the amount that should be credited to R in respect of his share of goodwill.
Option 1: Rs 90,000
Option 2: Rs 30,000
Option 3: Rs 45,000
Option 4: Rs 60,000
Correct Answer: Rs 45,000
Solution : Answer = Rs 45,000
Total Profits = 1,20,000 + 60,000 + (-20,000) + 80,000 = 2,40,000 R's Share of Profit = 2,40,000 * 3/8 = 90,000 Goodwill = 90,000 * 1/2 (50%) = 45000 Hence, the correct option is 3.
Question : P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided under the partnership deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profits credited to his account during the last 4 completed years (books of accounts are closed on 31st March). R died on 1st April, 2018. The firm's profits for the last 4 years were as follows: 2015 (Profits Rs. 1,20,000); 2016 (Profits Rs.60,000); 2017 (Losses Rs.20,000) and 2018 (Profits Rs. 80,000). The amount that should be credited to R in respect of his share of goodwill will be
Option 1: Rs 45,000
Option 2: Rs 90,000
Option 3: Rs 40,000
Option 4: None of the above.
Question : Sharma, Verma and Goyal are partners in a firm. On 1st April 2012 the balances in their Capital Accounts were as follows: Sharma Rs. 4,00,000; Verma Rs. 4,20,000 and Goyal Rs. 3,70,000. The firm closes its accounts every year on 31st March. Verma died on 30th September 2012. In the event of the death of any partner following are the provisions in the Partnership Deed: (i) Interest on Capital will be calculated at the rate of $10 \%$ p.a. (ii) The deceased partner; 's legal representative will be paid Rs. 35,000 for his share of goodwill. (iii) The firm had a Reserve Fund of Rs. 2,10,000. The deceased partner will be paid his share in the Reserve Fund. (iv) His share of profit till the date of death will be calculated based on sales. It is also specified that the sales during the year 2011-12 were Rs. $15,00,000$. The sales from 1st April 2012 to 30th September 2012 were Rs. 3,00,000. The profit of the firm for the year ending 31st March 2012 was Rs. 3,00,000. Question: Deceased 's partners share of profit will be ____________or profit and loss suspense account will be______________.
Option 1: debited by Rs 20,000
Option 2: credited by Rs 20,000
Option 3: debited by Rs 60,000
Option 4: Credited by Rs 60,000
Question : A, B and S were partners sharing profits in the ratio 2: 2: 1. On July 1, 2017, Shreya died. The books of accounts are closed on March 31 every year. Sales for the year 2016-17 amounted to Rs.5,00,000 and that from 1st April to 30th June 2017 were Rs. 1,40,000. The rate of profit during the past three years had been 10% on sales. Since S's legal representative was her only son, who is specially abled, it was decided that the profit for the purpose of settling S's account is to be calculated as 20% of sales.
Calculate S's share of profits till the date of her death and pass the necessary journal entry for the same.
Option 1: Debited profit and loss account by Rs 5,600 and credited S's capital account
Option 2: Debited profit and loss suspense account by Rs 5,600 and credited S's account
Option 3: Debited S's capital account and credited profit and loss suspense account
Option 4: None of the above
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