Skip to content
Question
Q.

Trisha, Anisha and Rishika were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2022 was as follows :

Balance Sheet of Trisha, Anisha and Rishika as at 31st March, 2022

LiabilitiesAmount ₹AssetsAmount ₹
Capitals :Plant and Machinery5,00,000
Trisha 3,00,000Stock1,00,000
Anisha 2,00,000Debtors60,000
Rishika 1,00,0006,00,000Cash at Bank40,000
General Reserve50,000
Creditors50,000
7,00,0007,00,000

Trisha died on 31st July, 2022. According to the partnership deed, the executors of the deceased partner were entitled to : (i) Balance in partner's capital account. (ii) Salary @ ₹ 15,000 per quarter. (iii) Share of goodwill calculated on the basis of twice the average of past three year's profits. (iv) Share of profits from the closure of the last accounting year till the date of death on the basis of last year's profit. Profit for 2019 – 20, 2020 – 21 and 2021 – 22 were ₹ 1,00,000, ₹ 2,00,000 and ₹ 1,50,000 respectively. (v) Trisha withdrew ₹ 20,000 on 1st May, 2022 for her personal use. Showing your working clearly, prepare Trisha's Capital Account to be rendered to her executors.

CBSECBSE Class XII Board 2023Subjective· 6mImportance★★★★★
🔒 Locked · start free trial →

You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.

Start your 14-day free trial to unlock the full solution →

Trisha's executors are entitled to ₹4,60,000 — her capital balance, salary for four months, share of goodwill, share of General Reserve and share of profit up to the date of death, less her drawings.


Concept and Treatment

When a partner dies mid-year, the partnership deed specifies what the deceased partner's estate is entitled to receive. The deceased partner's Capital Account is prepared to accumulate all amounts due, which are then transferred to the Executors' Account (a liability of the firm).

  1. Opening capital balance — the starting point (₹3,00,000).
  2. Salary — an appropriation; Trisha is entitled to salary for 1st April 2022 to 31st July 2022 (4 months). At ₹15,000 per quarter this is ₹20,000.
  3. Share of goodwill — goodwill is valued at twice the average profit of the past three years; Trisha's share is credited to her account and debited to the continuing partners in their gaining ratio.
  4. Share of profit — from 1st April to the date of death, estimated on the basis of last year's profit.
  5. Drawings — debited to her account.
  6. General Reserve — the opening balance is distributed among all partners in the profit-sharing ratio.

Working Notes

W.N. 1 — Salary (1st April to 31st July 2022): 4 months = 4/3 quarters; 15,000 × 4/3 = ₹20,000.

W.N. 2 — Goodwill: Average profit = (1,00,000 + 2,00,000 + 1,50,000)/3 = ₹1,50,000; goodwill = 2 × 1,50,000 = ₹3,00,000; Trisha's share = 2/5 × 3,00,000 = ₹1,20,000, borne by Anisha and Rishika in the gaining ratio 2 : 1 → Anisha ₹80,000, Rishika ₹40,000.

W.N. 3 — Share of profit: 1,50,000 × 4/12 = ₹50,000; Trisha's share = 2/5 × 50,000 = ₹20,000.

W.N. 4 — General Reserve: 2/5 × 50,000 = ₹20,000.


Trisha's Capital Account

ParticularsAmount (₹)ParticularsAmount (₹)
To Drawings20,000By Balance b/d3,00,000

Unlock everything free for 14 days

  • Full step-by-step solutions
  • Concept-first explanations
  • Methods, shortcuts & mistakes
  • PYQ mapping + timed mock tests

Full access for 14 days. No credit card required.