P, Q & R were partners sharing profits and losses in the ratio of 5:3:2. On 31st Dec. 2012 their Balance Sheet stood as follows:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
P, Q & R were partners sharing profits and
losses in the ratio of 5:3:2. On 31st Dec. 2012 their Balance Sheet stood as follows:
BALANCE SHEET
as at 31.12.2012
Liabilities
$
Assets
$
Sundry Creditors
General Reserve
Capitals -
1,40,000
1,40,000
17,500
5,25,000
3,50,000
2,62,500
87,500
1,92,500
1,05,000
Cash at Bank
Debtors
Stock
Machinery
Building
Patents
5,25,000
4,37,500
2,62,500 12,25,000
Goodwill
15,22,500
15,22,500
R died on 31st March 2013, the following adjustments were made:
(a) Goodwill be valued at 2½ years' purchase of the average profits of last four years,
The profits for the last four years were as under:
2009 – $ 2,27,000; 2010 – $ 2,10,000; 2011 - $ 2,80,000; 2012 – $ 2,60,000
(b) Machinery be valued at $ 2,90,000; Patents be valued at $ 4,97,500; Building be
valued at $ 4,37,500.
(c) For the purpose of calculating R's share in the profits, profits of 2013 should be
taken to have accrued on the basis of profits of 2012.
Calculate the amount payable to the executors of the deceased partner.
5POR
Transcribed Image Text:P, Q & R were partners sharing profits and losses in the ratio of 5:3:2. On 31st Dec. 2012 their Balance Sheet stood as follows: BALANCE SHEET as at 31.12.2012 Liabilities $ Assets $ Sundry Creditors General Reserve Capitals - 1,40,000 1,40,000 17,500 5,25,000 3,50,000 2,62,500 87,500 1,92,500 1,05,000 Cash at Bank Debtors Stock Machinery Building Patents 5,25,000 4,37,500 2,62,500 12,25,000 Goodwill 15,22,500 15,22,500 R died on 31st March 2013, the following adjustments were made: (a) Goodwill be valued at 2½ years' purchase of the average profits of last four years, The profits for the last four years were as under: 2009 – $ 2,27,000; 2010 – $ 2,10,000; 2011 - $ 2,80,000; 2012 – $ 2,60,000 (b) Machinery be valued at $ 2,90,000; Patents be valued at $ 4,97,500; Building be valued at $ 4,37,500. (c) For the purpose of calculating R's share in the profits, profits of 2013 should be taken to have accrued on the basis of profits of 2012. Calculate the amount payable to the executors of the deceased partner. 5POR
Expert Solution
steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Partnership Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education