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Question:

Pranav, Karan, and Rahim were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March 2017, their Balance Sheet was as follows:

Balance Sheet of Pranav, Karan, and Rahim as on 31.3.2017

Liabilities Amount (Rs.) Assets Amount (Rs.)
Creditors 30,00,000 Fixed Assets 4,50,000
General Reserve 1,50,000 Stock 1,50,000
Capitals: Debtors 2,00,000
Pranav 2,00,000 Bank 1,50,000
Karan 2,00,000
Rahim 1,00,000
35,00,000 9,50,000

Karan died on 12.06.2017. According to the partnership deed, the legal representative of the deceased partner was entitled to the following:
(i) Balance in his Capital Account
(ii) Interest on Capital @ 12% p.a. up to the date of death.

Solution:

Calculation of Interest on Capital:

Karan's capital as on 31st March 2017 = Rs. 2,00,000
Period for which interest is calculated = 72 days (from 31st March 2017 to 12th June 2017)
Interest rate = 12% p.a.

Interest on capital = (200000 * 12/100 * 72/365)
Interest on capital = Rs. 4712.33 (approximately)

Calculation of Karan's share of profit up to the date of death:

The profit sharing ratio of Pranav, Karan, and Rahim is 2:2:1. Let's assume the profit earned from 1st April 2017 to 12th June 2017 is 'x'.

Karan's share of profit = (2/5) * x

Preparation of Karan's Capital Account:

Particulars Amount (Rs.) Particulars Amount (Rs.)
To Balance b/d 2,00,000 By Balance c/d
To Interest on Capital 4,712.33 By Share of Profit
To Share of Profit
Total Total

Note: This solution requires additional information to complete the calculation of Karan's share of profit up to the date of his death and prepare the complete Capital Account. The profit for the period needs to be determined. Also, any adjustments for goodwill, revaluation, etc., would also need to be included. The provided information only allows for a partial solution showing the method of calculation of the interest on capital.