) Nisha, Myrah and Shilpa were partners for 2 : 1 : 1. Shipla died on July 01, 2021. Profits
for last three years were ?20,000, ?35,000 and ?17,000 respectively. The books were
closed on March 31. Pass Journal entry for Shilpa?s profit share till his death.
(b) Zo, Mo and Lo were partners for 2 : 1 : 1. Lo died on July 01, 2020. Sales for the
previous year was ?60,000 and profits were ?30,000. Sales from April 01, 2020 to July
01, 2021 amounted to ?25,000. Ascertain Lo?s share of profit and pass Journal entry.
Solution:
(a) Journal
Note: Current years profit is estimated with an average profit of past 3 years = 20000+35000+17000/3 = 24000
Profit till July 1st = 24000 x 3/12 = 6000
(b)Journal
Note:
Profit %=Last years profit/last years sales x 100 = 60,000/30,000 x 100 = 200%
current years estimated profit = Current Year’s Sales up to the date of death × Profit %
25000 x 200% = 50,000
(a) Journal
| Date | Particulars | LF | Debit | Credit |
| Profit & Loss a/c Dr To Nisha's capital a/c To Myrah's capital a/c To Shilpa's capital a/c (Profits distributed on Shilpa's death on the ratio 2:1:1) | 6000 | 3000 1500 1500 |
Profit till July 1st = 24000 x 3/12 = 6000
(b)Journal
| Date | Particulars | LF | Debit | Credit |
| Profit & Loss a/c Dr To Lo's capital a/c (Profit shared on Lo's death) | 12,500 | 12,500 |
Note:
Profit %=Last years profit/last years sales x 100 = 60,000/30,000 x 100 = 200%
current years estimated profit = Current Year’s Sales up to the date of death × Profit %
25000 x 200% = 50,000
Decease Partner’s share = Firm’s Profit as per Step 2 × Deceased Partner’s ratio
= 50,000 x 1/4 = 12,500