A and B are partners. The Partnership deed provides, inter alia, that:

1. The accounts be balanced on December 31 every year.

2. The profits be divided 1/2 to A 1/3 to B and 1/6 carried to a Reserve Account.

3. In the event of the death of a partner, his executors be entitled to be paid out :

(a) the capital to his credit at the date of death;

(b) his portion of the reserve at the date of last Balance Sheet;

(c) his portion of profits upto the date of death based on the average profits of the last three completed years; and

(d) his portion of the total profit for the three preceding years by way of goodwill

On December 31,2017, the Ledger Balances were:

The profits of the three preceding years were: 2015----₹42,000; 2016----₹39,000; and 2017----₹45,000. B dies on May 1, 2018. Show the account between the firm and B’s executors as on May 1, 2018.

Transcribed Image Text:

A Capital A/c B Capital A/c Reserve Creditors Bills Receivable Investment Cash Dr. Cr. 90,000 60,000 30,000 30,000 20,000 50,000 1,40,000 2,10,000 2,10,000