AHSEC Accountancy Question Bank: Death of a Partner for Upcoming Exam

AHSEC CLASS 12
ACCOUNTANCY QUESTION BANK
(NOT APPLICABLE FOR 2021 EXAM)

UNIT – 5B Death of a Partner

Part A: Ascertainment of Profit of Deceased Partner

Q.1. X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3:2:1. The profit of the firm for the year ended 31st March, 2019 was Rs. 3,00000. Y dies on 1st July 2019. Calculate Y’s share of profit up to date of death assuming that profits in the year 2018- 2019 have been accured on the same scale as in the year 2017-18 and pass necessary journal entry.

Q.2. Ram, Manohar and Joshi were partners in a firm. Joshi died on 28th February, 2019. 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 completed years of profits before death. Profits for 2016, 2017 and 2018 were Rs. 7,000, Rs. 8,000 and Rs. 9,000 respectively. Calculate Joshi’s share of profit till his death.

Q.3. Ashim, Branil and Chandan were partners in a firm sharing profits and losses, in the ratio 2 : 2 : 1. Candan died on 30th June 2019. His share of profit from the closure of last accounting year till the date of death was to be calculated on the basis of the average of four completed years profit, before death. Profits for the years ended on 31st Dec, 2015, 2016, 2017 and 2018 were Rs. 12,000, Rs. 13,000, Rs. 15,000, Rs. 16,000 respectively. Calculate Chandan’s share of profit till his death and pass necessary Journal Entries in the books of the firm. [H.S.’ 08]

Q.4. A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. B died on 31st March, 2019. For the year 2019, proportionate profit of 2018 is to be taken into consideration. For 2018, a bad debt of Rs. 2,000 has to be adjusted. The profit for 2018 was Rs. 14,000 before adjustment of bad debts. Calculate B’s share of profit till his death.

Q.5. A, B and C were partners in a firm sharing profits in the ratio of 2:2:1. C dies on 31st July, 2019. Sales during the previous year upto 31st march, 2019 were Rs. 6, 00, 000 and profits were Rs. 1,50, 000. Sales for the current year upto the date of death were Rs. 250000. Calculate C’s share of profits upto the date of his death and pass necessary journal entry.

Q,6. S, T and U were partners in a firm sharing profits in the ratio of 1:2:2. On 15.2.2013, S died and new profit sharing ratio of T and U was agreed to be 3:2. On S’s death, the goodwill of the firm was valued at Rs.60000. Calculate the gaining ratio and pass the necessary Journal Entries on S’s death for treatment of goodwill without opening goodwill account.             2014

Q.7. P, Q and R partners sharing profits and losses in the ratio of 2 : 1 : 1. It is provided in the partnership deed that in the event of retirement/death of a partner, he/his legal representatives would be paid his share of profits from the beginning of the accounting year to the date of retirement/death, which shall be taken on proportionate basis of profits of the previous year as increased by 25%.

P died on 30th June, 2011. The books accounts are closed on calendar year basis from 1st January to 31st December. The profit of the firm for the calendar year 2010 is Rs. 1,50,000. On 31st March, 2011, the firm received notice from the insurance company that the insurance premium in respect of fire insurance policy had been under-charged to the extent of Rs. 6,000 in the year 2010 and the firm has to pay immediately. You are required to calculate P’s share of profit.

Part B: Treatment of goodwill in case of death of a partner

Q.1. A, B and C were partners in a firm sharing profits in 3:2:1 ratio. The firm closes its books on 31st March every year. B died on 12-06-2019. On B’s death the goodwill of the firm was valued at Rs. 60,000. Goodwill already appears in the books of the firm Rs. 1,20,000. Pass necessary journal entries for the treatment of goodwill at the time of his death.

Q.2. A, B and C were partners in a firm sharing profits in 3:2:1 ratio. The firm closes its books on 31st March every year. B died on 12-06-2019. On B’s death the goodwill of the firm was valued at Rs. 60000. On B’s death his share in the profit of the firm till the time of his death was to be calculated on the basis of previous years which was Rs.150000. Calculate B’s share in the profit of the firm. Pass necessary journal entries for the treatment of goodwill and B’s share of profit at the time of his death.

Part C: Preparation of deceased partner’s capital account

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ALSO READ (AHSEC ASSAM BOARD CLASS 12):

1. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE NOTES

2. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION (THEORY)

3. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION BANK (PRACTICAL)

4. AHSEC CLASS 12 ACCOUNTANCY PAST EXAM PAPERS (FROM 2012 TILL DATE)

5. AHSEC CLASS 12 ACCOUNTANCY SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)

6. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE MCQS

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Q.1. R, S and T were partners sharing profits and losses in the proportion of ½, 1/3 and 1/6 respectively. T expired on 31st May, 2019. The partnership agreement provided that:

a)      Interest on capital to be allowed at 12% p.a.

b)      T to be credited with salary of Rs. 18,000 p.a.

c)       On the death of any of partners, his heir will receive in addition to the balance of Capital Account:

Ø  Salary and interest on capital.

Ø  Share of proportionate profit from last Balance Sheet to the date of death based on annual average profits of last 3 years (after interest on capital and salary to the partners).

d)      Partner’s capital were:  R – Rs. 3,00,000; S – Rs. 2,00,000; T – Rs. 1,00,000.

e)      Profits (before interest and salary) were:  2018-2019 – Rs. 1,24,000; 2017-2018 – Rs. 1,20,000; 2016-2017 – Rs. 80,000; and 2015-2016 – Rs. 1,30,000.

f)       There is no change in capital since 31.3.2018

You are required to calculate T’s share of profit.

Q.2. A, B and C are partners in a firm sharing profits and losses in the ratio of 3:2:1. On 31.3.2019 their Balance Sheet was as follows:

Liabilities

Rs.

Assets

Rs.

Capital Accounts:

A                        75,000

B                        70,000

C                        50,000

Sundry Creditors

General Reserve

 

 

 

1,95,000

22,000

24,000

Buildings

Machinery

Patents

Stock and Debtors

Cash at Bank

75,000

36,000

15,000

45,000

70,000

 

2,41,000

 

2,41,000

C died on May 31st 2019. It was agreed that:

a)      Goodwill was valued at 3 years’ purchase of the average profits of the last five years, which were 2014-15: Rs. 40,000; 2015-16: Rs. 40,000; 2016-17: Rs. 30,000; 2017-18: Rs. 40,000 and 2018-19: Rs. 50,000.

b)      Machinery was valued at Rs. 70,000, Patents at Rs. 20,000 and Buildings at Rs. 66,000.

c)       For the purpose of calculating C’s share of profits till the date, it was agreed that the same be calculated on the basis the average profits for the last 2 years.

d)      The executors of the deceased partner is to be paid the entire amount due by means of a cheque

Prepare C’s Capital A/c to be rendered to the executor and also a journal entry for the settlement of the amount due to C’s executors.

Q.3. The following is the Balance Sheet of Ram, Mohan and Sohan as on 31st December 2018.

Liabilities

Rs.

Assets

Rs.

Creditors

Reserve Fund

Capital Accounts:

A                    1,00,000

B                        50,000

C                        50,000

30,000

32,000

 

 

 

2,00,000

Furniture

Stock and Debtors

Cash at Bank

Cash in Hand

Profit and Loss Account

90,000

1,20,000

40,000

2,000

10,000

 

2,62,000

 

2,62,000

B died on 31st March 2019. Under the partnership agreement the executor of B was entitled to:

a)      Amount of standing to the credit of his Capital Account.

b)      Interest on Capital which amounted to Rs. 625.

c)       His share of goodwill Rs. 35,000.

d)      His share of profit from the closing of the last financial year to the date of death which amounted to Rs. 4,375.

B’s executor was paid Rs. 18,000 on 1st April 2019 and the balance was to be paid in four equal yearly installments starting from 31.3.2020 with interest @ 6%. Pass necessary journal entries and draw up B’s Account to be rendered to his executors and B’s Executor’s Account till it is finally paid.

Q.4. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 5:3:2. On 31.3.2019 their Balance Sheet was as follows:

Liabilities

Rs.

Assets

Rs.

Capital Accounts:

X                        75,000

Y                        62,500

Z                        57,500

Sundry Creditors

 

 

 

1,75,000

32,000

Buildings

Machinery

Patents

Stock and Debtors

Cash at Bank

50,000

75,000

15,000

57,500

20,000

 

2,07,500

 

2,07,500

Z died on 31.7.2019, it was agreed that:

a)      Goodwill is valued at 2 ½ year’s purchase of the average profits of the last four years, which were as follows:

Years

Profits (Rs.)

2015-2016

2016-2017

2017-2018

2018-2019

32,500

30,000

40,000

37,500

b)      Machinery be valued at Rs. 70,000; Patents at Rs. 20,000 and Buildings at Rs. 62,500.

c)       For the purpose of calculating Z’s share of profits in the year of his death, the profits in 2010-2011 should be taken to have been accrued on the same scale as in 2009-2010.

d)      A sum of Rs. 17,500 was paid immediately to the executors of Z and the balance was paid in four half yearly installments together with interest at 12% p.a. starting from 1.1.2020.

Give necessary journal entries to record the above transactions and Z’s executor’s account till the payment of installment due on 1.1.2019.

Q.5. A, B and C carried on business in partnership. Profit being divisible in the ratio of 3:2:1. The books of 31st December 2011 showed their capitals to be Rs. 5,200, Rs. 2,500 and Rs. 1,500. On 28th Feb’ 2012, A died and you are instructed to prepare an account for presentation to his legal representatives having regarded the following facts:

a)      The firm has insured the partners’ lives severally. A’s for Rs. 4,500; B’s for Rs. 2,400 and C’s for Rs. 1,200. Premiums were charged to P/L A/c. The surrender value of each policy on 28th Feb’ 2012 amounted in each case to 1/4th of the sum assured.

b)      Capital carried interest at 5% p.a.

c)       A’s drawings from 01.01.2012 to the date of his death amounted to Rs. 600.

d)      A’s share of profits for portion of the current financial year for which he lived was to be taken at a sum calculated on the average of the three years’ profits. Goodwill is to be valued at 2 years’ purchase of the average profits of the last three years. The annual profits for last 3 years’ were Rs. 1,450, Rs. 3,700 and Rs. 4,300 respectively. Show the account of the executors of A and journalize the entries effecting it.

Q.6. A, B and C are in a partnership sharing profits and losses in the proportion of 6:5:4. They take out a Joint Life Assurance Policy for Rs. 2,00,000. The annual premium on the policy is Rs. 7,500 and this is treated as a business expenses. Accounts are closed annually on 31st Dec. The partnership Deed provides that the representatives of a deceased partner are entitled to:

1)      The deceased partner’s capital appearing in the last Balance Sheet.

2)      Interest on capital @ 6% p.a. to the date of his death.

3)      His share of profits be calculated till the date of his death on the average of the last three years’ profits and

4)      Share of Goodwill be calculated at 2 years purchase of the average of the last three years profit.

B died on 1.4.2012. His drawings in 2012 up to his death amounted to Rs. 3,000. His capital shown in the 2011 Balance Sheet was Rs. 80,000.

The profits for the year 2009, 2010 and 2011 amounted to Rs. 65,000, Rs. 64,000 and Rs. 69,000 respectively. Draw up B’s Account to show the amount due to his estate from the firm.

Q.7. X, Y and Z are in a partnership sharing profits in the proportion of 5:3:2. On 31.03.2011 their Balance sheet was as under:                  8                        2013

Liabilities

Amount

Assets

Amount

Creditors

Reserve

Capital Account:

X – 35000

Y – 20000

Z – 15000

7000

10000

 

 

 

70000

Building

Machinery

Stock and Debtors

Patents

Cash

20000

30000

18000

6000

13000

 

87000

 

87000

X died on 01.10.2011. It was agreed between his executors and the remaining partners that:

(i) Goodwill is valued at 2 years purchase of the average profit of the previous 5 years which were:

2006 – 07:15000, 2007 – 08: 13000, 2008 – 09: 12000, 2009 – 10: 15000, 2010 – 11: 20000.

(ii) Patents are valued at Rs.8000, Machinery at Rs.28000, and Building at Rs.30000.

(iii) Profit for the year 2011 – 12 is taken as having accrued at the same rate as the previous year.

(iv) Interest on Capital is provided at 10% p.a.

(v) A sum of Rs.11500 was to be paid to his executors immediately.

Prepare X’s Capital Account and his Executor’s Account at the time of his death.

Q.8. A, B and C were partners in a firm sharing profits in the ratio 5:3:2. On 31st March, 2013, their Balance Sheet was as follows:           5          2015

Balance Sheet

Liabilities

Rs.

Assets

Rs.

Creditors

Reserves

Capital :

    A = 30,000/-

    B = 25,000/-

    C = 15,000/-

11,000/-

6,000/-

 

 

 

70,000/-

Buildings

Machinery

Stock

Debtors

Cash at Bank

20,000/-

30,000/-

10,000/-

19,000/-

8,000/-

 

87,000/-

 

87,000/-

A died on 1st October, 2013. It was agreed between his executors and the remaining partners that:

(i)      Goodwill to be valued at 2.5 years purchase of the average profits of the previous four years which were:

Year

Profit (Rs.)

2009 – 2010

2010 – 2011

2011 – 2012

2012 – 2013

13,000/-

12,000/-

20,000/-

15,000/-

(ii)    Machinery and Building be valued at Rs. 28,000/- and Rs. 25,000/- respectively.

(iii)   Profit for the year 2013 – 14 is taken as having accrued at the same ratio as that of the previous year.

(iv)  Interest on capital is provided at 10% p.a.

(v)    The mount due to A shall be transferred to his Executor’s Account.

Prepare A’s Capital Account as on the date of his death.

Q.9. Anupam, Binoy and Chandan were partners in a firm sharing profits in the ratio of 2: 3: 5. On 31st March, 2014, their Balance Sheet was as follows:                   5                    2016

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Capitals :

    Anupam   =      60,000/-

    Binoy        =      50,000/-

    Chandan  =     30,000/-

Reserve

Creditors

Bills Payable

 

 

 

1,40,000

12,000

20,000

2,000

Cash at Bank

Debtors

Bills Receivable

Stock

Furniture

Machinery

16,000

30,000

8,000

20,000

60,000

40,000

TOTAL

1,74,000

TOTAL

1,74,000

Anupam died on 1st October, 2014. It was agreed between his executors and the remaining partners that:

a)      Goodwill will be valued at 3 years purchase of the average profits of the last four years which were :

Year

Profit

2010-11

2011-12

2012-13

2013-14

30,000/-

40,000/-

40,000/-

40,000/-

 

b)      Machinery and Furniture be valued at Rs. 36,000/- and Rs. 56,000/- respectively.

c)       Profit for the year 2014-15 be taken as having accrued at the same rate as that of the previous year.

d)      Interest on capital be provided at 10% p.a.

e)      The amount due to Anupam shall be transferred to his Executor’s Loan Account.

Prepare Anupam’s Capital Account as on the date of his death. ********************************************

ALSO READ (AHSEC ASSAM BOARD CLASS 12):

1. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE NOTES

2. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION (THEORY)

3. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION BANK (PRACTICAL)

4. AHSEC CLASS 12 ACCOUNTANCY PAST EXAM PAPERS (FROM 2012 TILL DATE)

5. AHSEC CLASS 12 ACCOUNTANCY SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)

6. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE MCQS

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Q.10. A, B and C were partners in a firm sharing profits in the ratio of 3:2:1. Their Balance Sheet as on 31/03/16 was as follows:                 5                   2017

Liabilities

(Rs.)

Assets

(Rs.)

Sundry Creditors

Reserve

Capital Account:

     A:       =       20,000/-

     B:       =       10,000/-

     C:       =       20,000/-

4,000

6,000

 

 

 

50,000

Buildings

Machinery

Stock

Debtors

Cash at Bank

20,000

16,000

4,000

15,000

5,000

 

60,000

 

60,000

A died on 30/09/2016. Under the agreement, the executors of the deceased partner were entitled to:

a)      Amount outstanding to the credit of partner’s capital account.

b)      Interest on capital at 12% per annum.

c)       Share of goodwill on the basis of four year’s purchase of the average profit of last three years.

d)      Share of profit from closing of the last financial year to the date of death on the basis of last year’s profit.

e)      Profits for the last three years were:

Year

Profits

2013-14

2014-15

2015-16

8,000/-

12,000/-

7,000/-

Prepare A’s capital Account on the date of his death.                                                                                                                     

Q.11. Mohit, Shohan and Rahul were partners sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as on 31st March, 2017 was as follows:                5                        2018

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Capital:

Mohit:                               30,000/-

Sohan:                             20,000/-

Rahul:                                 20,000/-

 

General Reserve

Creditors

 

 

 

70,000

 

5,000

25,000

Fixed Assets

Stock

Sundry Debtors

Cash at Bank

60,000

10,000

20,000

10,000

 

1,00,000

 

1,00,000

Shohan died on June 30, 2017. It was agreed between the remaining partners and his executors that:

1)      Goodwill will be valued at Rs. 50,000.

2)      Interest on capital be provided at 10% p.a.

3)      Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year which was Rs. 40,000/-

4)      The amount due to Sohan shall be transferred to his Executor’s Loan Account.

Prepare Shohan Capital Account as on the date of his death.                                      

Q.12. Following is the Balance Sheet of P, Q, and R as on March 31, 2018.                5            2019

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Sundry Creditors

General Reserve

Capital:

P                         30,000/-

Q                         20,000/-

R                         20,000/-

16,000

16,000

 

 

 

70,000

 

Bills Receivable

Furniture

Stock

Sundry Debtors

Cash at Bank

Cash in Hand

16,000

22,600

20,400

22,000

18,000

3,000

 

1,02,000

 

1,02,000

Q died on June 30, 2018. Under the agreement the executors of the deceased partner were entitled to:

a)            Amount standing to the credit of Partner’s Capital A/c.

b)            Interest on Capital @ 5% p.a.

c)             Share of goodwill on the basis of twice the average of the past three years profit.

d)            Share of profit from the closing of the last financial year to the date of death on the basis of last year’s profit (2017-18)

e)            Profit for the last three years were:

Year

Profit

(Rs.)

2015 – 16

2016 – 17

2017 – 18

12,000/-

16,000/-

14,000/-

Prepare Q’s capital account on the date of his death.

Q.13. Ajoy, Bijoy and Sanjay were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 31st March, 2019 their Balance Sheet was as under:                       5                     2020

Balance Sheet

Liabilities

Rs.

Assets

Rs.

Creditors

Reserve

Capital:

Ajoy                       24,000

Bijoy                       12,000

Sanjay                      8,000

4,000

6,000

 

 

 

44,000

Building

Machinery

Stock

Debtors

Cash at Bank

 

20,000

16,000

5,100

6,000

6,900

 

54,000

 

54,000

 

Ajoy died on 30/09/2019. Under the partnership agreement the executors of a deceased partner were entitled to:

a)         Amount standing to the credit of Partners’ Capital account.

b)         Interest on Capital @ 12% p.a.

c)          Share of goodwill on the basis of 4 years purchase of last 3 years average profits.

d)         Share of profit from the closing of the last financial year to the date of death on the basis of last year’s profit.

e)         Profit for the last three years were:

Year

Profit

2016-17

2017-18

2018-19

8,000 /-

12,000 /-

7,000 /-

 Prepare Ajoy’s Capital A/c on the date of his death.

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