Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of 2:2:1. On 31-3-2014 their Balance Sheet was as follows:
On 30thJune, 2014 Dev died. According to partnership agreement Dev was entitled to interest on capital at 12% per annum. His share of profit till the date of his death was to be calculated on the basis of the average profits of last four years. The profit of the last four years were:
On 1-4-2014, Dev withdrew Rs 15,000 to pay for his medical bills.
Prepare Dev's account to be presented to his executors.
Calculation of Interest on Capital:
77,000*12/100*3/12 = 2310 Rs
Calculation of Share of Profit:
Average Profit = (2,04,000+1,80,000+90,000-57,000)/4 = 1,04,250 Rs
Dev’s share of profit = 1,04,250*3/12*2/5 = Rs 10,425
Calculation of Share of Debit balance in P&L A/c
57,000*2/5 = Rs 22,800.