Question 1:
PRACTICAL PROBLEMS
Vilas, Mangal, Guru were partners in a business sharing profits and losses in the ratio of 2:1:1 respectively. Their Balance sheet as on 31st March, 2012 was as follows:
Balance Sheet as on 31st March 2012
Guru died on 1st July, 2012
1) Land and Building was to be revalued to Rs 7,000 and RDD was to be created of Rs 200.
2) The drawings of Guru upto the date of his death amounted to Rs 1,000/-
3) Charge interest on drawings Rs 100/-
4) His share of goodwill should be calculated at ‘Three’ years purchase of the profits for the last four years which were Rs 15,000, Rs 13,000/-, Rs 7,000, Rs 5,000
5) The deceased partners share of profit upto the date of his death to be calculated on the basis of average profit of last two years.
Prepare:
1) Profit and Loss Adjustment A/c
2) Partners Capital A/cs
3) Balance Sheet of the continuing firm
4) Give working or share of profit and goodwill
*Note: As per the textbook, the Profit of P&L Adjustment Account, Closing Balance of Legal Heir’s Loan A/c and the total of the Balance Sheet are given as Rs 900, Rs 10,800 and Rs 20,175, respectively. However, as per the above solution, we are getting Profit as Rs 800, whereas, Loan A/c balance as Rs 10,775. In addition to this, there seems to be some problem in the question either in terms of missing items or in terms of misprint of amounts, since the amount of the Liabilities side is not getting matched with that of the Assets side.
