A and B are partners. The Partnership deed provides, inter alia, that: 1. The accounts be balanced
Question:
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.
Step by Step Answer:
Financial Accounting Volume II
ISBN: 9789387886230
4th Edition
Authors: Mohamed Hanif, Amitabha Mukherjee