The Misuse of Protected Information Betty had to pick up her 14-year-old daughter, Traci, early from school due to a plumbing problem that closed the school early. Since Betty, the….
show the Ledger Accounts of the partners and the Balance Sheet of B and C as it would stand after A’s share is paid out.
A, B and C were partners sharing profits in the proportion of one-half, one-fourth and one-fourth respectively. Their Balance Sheet on 31st December, 2014 was as follows :
A died on 1st January, 2015. The firm had affected an assurance of Rs 10,000 on the joint lives of the three partners and the amount on the policy was realised on 1st February, 2015. According to the partnership agreement, the goodwill was to be calculated at two years’ purchase of average profits of three completed years preceding the death or retirement of a partner. The deceased partner’s share of capital and goodwill, etc., was paid out in cash on 1st March, 2015, the available cash balance being supplemented by a loan from the firm’s bankers on the security of the freehold property. The net profits of the years 2012, 2013 and 2014 were Rs 5,500, Rs 4,800 and Rs 6,600 respectively. You are required to show the Ledger Accounts of the partners and the Balance Sheet of B and C as it would stand after A’s share is paid out. (Ignore interest)