1|Death of a partner Sunil Kr Classes
1. Why heirs of deceased partner are entitled to share of goodwill of the firm? 2014
2. In which ratio do the remaining partners acquire the share of deceased partner? 2018C
3. Name the account which is opened to credit the share of profit of the deceased partner, till the time of his
death to his capital account. 2012, 2013
4. State any two deductions that may have to be made from the amount payable to the legal representatives of a
deceased partner. 2009
5. At what rate interest payable on the amount remaining unpaid to the executor of deceased partner. 2013
6. State the basis of calculating the amount of profit payable to the legal representative of a deceased partner in
the year of death. 2019
7. Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of 3:2:1. Navita died on 30th June,
2017. Her share of profit for the intervening period was based on the sales during that period, which were Rs
6,00,000. The rate of profit during the past four years had been 10% on sales. The firm closes its books on 31st
March every year. Calculate Navitra’s share of profit. [ ans 20,000 ]
8. #A, B and C are partners sharing profits and losses in the ratio of 3:2:1. B died on 30th June, 2020. For the year
ended 31st march, 2021, proportionate profit of 2020 is to be taken into consideration. During the year ended
31st march, 2021, bad debts of Rs 2,000 had to be adjusted. Profit for the year ended 31st March, 2020 was Rs
14,000 before adjustment of bad debts. Calculate B’s share of profit till the date of his death. [ ans. 1,000 ]
9. Ram, Manu and Hari were partners in a firm. Hari died on 30th June 2020. His share of profit from the closure of
the last accounting year till the date of death was to be calculated on the basis of the average of three
complete financial years of profits before death. Profits for the years ended 31st march 2018, 2019 and 2020
were Rs 1,10,000; Rs 1,20,000 and Rs 1,30,000 resp. Calculate Hari’s share of profit till the date of his death.
[ ans 10,000 ]
10. Ajay, Bhawna and Shreya were partners sharing profits in the ratio of 2:2:1. On 1st July, 2019 Shreya died . The
books of accounts are closed on 31st March every year. Sales for the year 2018-19 Rs 5,00,000 and that from 1st
april to 30th June, 2019 were Rs 1,40,000. Rate of profit during the past three years had been 10% on sales.
Since Shreya’s legal representative was her only son, who is specially abled, it was decided that profit for the
purpose of settling Shreys’s account is to be calculated as 20% on sales.
Calculate Shreya’s share of profit till the date of her death and pass necessary journal entry for the same.
[ ans. 5,600 ]
11. The Balance sheet of Sandhu, Raja and Karan who were sharing profits in the ratio of 4:2:4 as at 31 st March,
2012 was as follows:
Liabilities Assets
General Reserve 10,000 Cash 26,000
Bills payable 20,000 Stock 64,0000
Loan 22,000 Investments 85,000
Capital A/c Land & Building 97,000
Sandhu 80,000 Sandhu’s loan 20,000
Raja 60,000
Karan 1,00,000
2,92,000 2,92,000
Sandhu died on 31st July, 2012. The partnership deed provided for the following on the death of a partner
(a) Goodwill of the firm be valued at two years purchase of average profits for the last three years.
(b) Sandhu’s share of profit or loss till the date of his death was to be calculated on the basis of sales. Sales for
the year ended 31st march, 2012 amounted to Rs 4,50,000 and that from 1st April to 31st July 2012 to Rs
2,70,000. The profit for the year ended 31st march 2012 was calculated as Rs 1,25,000.
(c) Interest on capital was to be provided @5%p.a.
2|Death of a partner Sunil Kr Classes
(d) The average profits of the last three years were Rs 55,000.
(e) Prepare Sadhu’s capital account to be rendered to his executor.
[ Sadhu’s executor 1,39,333 ]
12. X, Y and Z were partners in a firm sharing profits in the ratio of 2:2:1. On 31st March, 2019, their Balance Sheet
was as follows:
Liabilities Assets
Trade Creditors 1,20,000 Cash at Bank 1,80,000
Bills payable 80,000 Stock 1,40,000
General Reserve 60,000 Debtors 80,000
Capitals Building 3,00,000
X 7,00,000 Advance to Y 7,00,000
Y 7,00,000 Profit & Loss a/c 3,20,000
17,20,000 17,20,000
Y died on 30th June, 2019. Partnership deed provided for the following on the death of a partner
(a) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years.
Profits for the years ended 2018; 2017; 2016 and 2015 were Rs 1,00,000: 1,60,000; 2,20,000 and Rs
4,40,000 respectively.
(b) Y’s share of profit or loss from 1st april 2019 till his death was to be calculated on the basis of the profit or
loss for the year ended 31.3.2019.
You are required to prepare Y’s capital account.
[ Y’s executor: 40,000 ]
13. Priya, Karam and Anna were partners of a firm sharing profits in the ratio of 3:2:1. Their balance sheet on 31st
March 2014 was as follows:
Liabilities Assets
Bills Payable 1,20,000 Cash in hand 20,000
Creditors 1,40,000 Debtors 1,40,000
Karam’s Loan @5% 1,00,000 Bills Receivable 70,000
Reserve 1,80,000 Stock 1,70,000
Capital A/c: Priya 2,00,000 Investment 1,30,000
Karam 1,20,000 Advertisement Suspense a/c 1,20,000
Anna 80,000 Building 2,90,000
9,40,000 9,40,000
Karam died on 12th June, 2014 and according to the Partnership deed his executors were entitled to be paid as
under:
(a) His share in the profits of the firm till the date of his death which will be calculated on the basis of average
profits of last three completed years.
(b) His share in the goodwill of the firm which will be calculated on the basis of two year’s purchase of total
profits of last three years.
(c) Profits for the last three years were : Rs 30,000; Rs 70,000 and Rs 80,000
Prepare Karam’s Capital a/c to rendered to his executors.
[ Karam’s executor: 3,65,000 ]
14. A, B and C were partners in a firm sharing profits and losses in the ratio of 5:3:2. The Profits of the firm for the
year ending on 31st March, 2019 ws Rs 90,000. C dies on 31st July , 2019. Determine the missing values in the
following . Journal entry.
Date Particulars Dr Cr
P&L and Loss Suspense A/c............Dr ?
To C’s Capital A/c ?
( C’s share of profits till the date of his death credited)
3|Death of a partner Sunil Kr Classes
15. X,Y and Z were partners sharing profits and losses in the ratio of 4:3:1 respectively. Y dies on 30th April, 2020.
On Y’s death, goodwill of the firm is valued at Rs 1,80,000. Y’s share is taken up by X and Z equally. Complete
the following Journal entry:
Date Particulars Dr Cr
X’s Capital A/c.........Dr ?
Y’s Capital A/c........Dr ?
To Y’s Capital A/c ?
( Y’s share of goodwill adjusted in the capital accounts of X and Z)
16. The Balance Sheet of Sandeep, Suresh and Subodh who share profits and losses in the ratio 5:4:3 as on 31st
March 2017 is given below:
Liabilities Assets
Outstanding expense 11,000 Bank 17,000
Creditors 32,000 Stock 16,000
Bills Payable 25,000 Debtors 34,000
Employees Provident Fund 32,000 Furniture 49,000
General Reserve 24,000 Machinery 68,000
Capital Accounts Land & Building 1,20,000
Sandeep 70,000
Suresh 60,000
Subodh 50,000
3,04,000 3,04,000
Subodh died on 30th November, 2017. The partnership Deed provided for the following adjustments on the
death of any partner, payable t the Executor of the deceased partner.
(a) Balance in capital account.
(b) Share of goodwill equal to 20% of the profits credited to such partner in the past three years.
The profit for the last three years ended 31st march 2017; 2016 and 2015 were: Rs 32,000; Rs 41,000; Rs
62,000 resp.
(c) Interest on capital @9% p.a. and interest on Drawings @5%
(d) Navin’s share of profit or loss for till the date of his death was to be calculated on the basis of average
profit or loss for the past three years.
(e) Subodh’s drawings till date of death were Rs 21,000.
Pass necessary journal entries for the above transactions in the books of the firm.
[ Subodh’s executor 51,200 ]
17. X,Y and Z were partners in a firm sharing profits and losses in the ratio of 3:2:1. Z died on 30th June, 2019.
The balance sheet of the firm as at that 31st March, 2019 is as follows:
Liabilities Assets
X’s Capital A/c 2,40,000 Machinery 2,40,000
Y’s Capital A/c 1,60,000 Furniture 1,50,000
Z’s Capital A/c 80,000 Investments 40,000
X’s Current A/c 16,000 Stock 64,000
Y’s Current A/c 5,000 Sundry Debtors 50,000
Reserve 60,000 Bills Receivable 22,000
Bills Payable 34,000 Cash at Bank 37,000
Sundry Creditors 40,000 Cash in hand 22,000
Z’s Current A/c 10,000
6,35,000 6,35,000
The following decisions were taken by the remaining partners:
(a) A provision for Doubtful Debts is to be raised at 5% on Debtors.
(b) While machinery to be deceased by 10%, Furniture and Stock are to be appreciated by 5% and 10% resp.
4|Death of a partner Sunil Kr Classes
(c) Advertising expenses Rs 4,200 are to be carried forward to the next accounting year and therefore, it is to
be adjusted through the Revaluation account.
(d) Goodwill of the firms is valued at Rs 60,000.
(e) X and Y are to share profits and losses equally in future.
(f) Profit for the year ended 31st March, 2019 was Rs 8,16,000 and Z’s share of profit till the date of death is to
be determined on the basis of profit for the year ended 31st March, 2019.
(g) The fixed Capital Accounts Method is to be converted into the Fluctuating Capital Account method by
transferring the current account balances to the respective partners capital account and prepare Z’s
executor’s account to show that Z’s Executors were paid in two half-yearly instalments plus interest of 10%
p.a. on the unpaid balance. The first instalment was paid on 31st December, 2019.
[ Revaluation loss: 8,400; Z’s executor 1,22,600 ]
Preparing Loan account when partner retires or dies on 31st march and Instalment
excluding interest is given
18. Partner B retired/died on 31st march 2021. B’s Loan(B’s executor’s loan) stands at Rs 3,00,000 and it was to be
repaid in 3 equal instalments along with Interest. Prepare Loan Account.
[ 1st Instalment: 1,18,000; 2nd Instalment : 1,12,000; 3rd Instalment : 1,06,000 ]
Preparing Loan account when partner retires or dies on 31st march and Instalment
including interest is given
19. Partner B retired/died on 31st march 2021. B’s Loan(B’s executor’s loan) stands at Rs 3,00,000 and it was to be
repaid in 3 equal instalments of 1,12,000 including Interest. Prepare Loan Account.
Preparing Loan account when partner retires or dies during the year and Instalment
excluding interest is given
20. Partner B retired/died on 30th Sep. 2018. B’s Loan(B’s executor’s loan) stands at Rs 2,00,000 and it was to be
repaid in 2 equal instalments along with Interest @12% p.a. Prepare Loan Account.