AHSEC Class 12 Accountancy Question Bank: Death of a Partner for 2023 exam

AHSEC CLASS 12
ACCOUNTANCY QUESTION BANK

UNIT – 5B Death of a Partner
Questions Asked From 2012 to 2022 Exam

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:             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,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.8. A, B and C were partners in a firm sharing profits in the ratio 5:3:2. On 31^st March, 2013, their Balance Sheet was as follows:     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 1^st 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:

(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 31^st March, 2014, their Balance Sheet was as follows:       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 1^st 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 :

 

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.      

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:     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 31^st March, 2017 was as follows:  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.     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 31^st March, 2019 their Balance Sheet was as under:       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.

Q. 14. P, Q and R were in partnership sharing profits and losses in the ratio of 4: 3: 3. On 31^st March, 2020 their Balance Sheet was as follows:      5    2022

Balance Sheet

Liabilities	(Rs.)	Assets	(Rs.)
Creditors Reserve Capitals: P                               1,05,000 Q                                  85,000 R                                  80,000	87,000 33,000       2,70,000	Fixed Assets Stock and Debtors Cash	2,90,000 85,000 15,000
	3,90,000		3,90,000

‘Q’ died on 30.06.2020. Under the partnership agreement the executors of a deceased partner were entitled to:

(a)       Amount standing to the credit of deceased partner’s capital account.

(b)       Interest on capital @ 12% p.a.

(c)        His share of goodwill. The goodwill of the firm on Q’s death was valued at Rs. 2,70,000.

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

The profit of the firm for the year ended 31.3.2020 was Rs. 2,40,000.

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

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 31^st March, 2019 was Rs. 3,00000. Y dies on 1^st 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 28^th 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 30^th 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 31^st 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 31^st 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 31^st July, 2019. Sales during the previous year upto 31^st 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.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 30^th June, 2011. The books accounts are closed on calendar year basis from 1^st January to 31^st December. The profit of the firm for the calendar year 2010 is Rs. 1,50,000. On 31^st 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 31^st 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 31^st 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.

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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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Part C: Preparation of deceased partner’s capital account

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 31^st 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 31^st 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 31^st 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 31^st 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 1^st 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 31^st December 2011 showed their capitals to be Rs. 5,200, Rs. 2,500 and Rs. 1,500. On 28^th 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 28^th Feb’ 2012 amounted in each case to 1/4^th 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.

CHAPTERWISE PRACTICAL IMPORTANT QUESTIONS

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 31^st 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.