Pravin, Prashant and Sushil are partners sharing profits and losses in the ratio 5 : 3 : 2 respectively. Their Balance Sheet as on 31st March 2022 was as follows:Balance Sheet as on 31st March 2022LiabilitiesAmount (₹)AssetsAmount (₹)Capital Accounts…

Answer: Revaluation profit ₹ 60,000 (Sushil ₹ 12,000); Sushil’s share of goodwill ₹ 24,000; amount payable to Sushil’s executors ₹ 1,46,000.

(c) Working of Sushil’s share in goodwill

• Total profit of 3 years = ₹ 1,80,000 + ₹ 1,20,000 – ₹ 1,20,000 (loss) = ₹ 1,80,000.
• Average profit = ₹ 1,80,000 ÷ 3 = ₹ 60,000.
• Goodwill = Average profit × years’ purchase = ₹ 60,000 × 2 = ₹ 1,20,000.
• Sushil’s share = ₹ 1,20,000 × 2/10 = ₹ 24,000, credited to Sushil and debited to Pravin and Prashant in their gain ratio 5 : 3 (₹ 15,000 and ₹ 9,000).

Other working notes

• Loose tools: ₹ 1,60,000 – ₹ 1,00,000 = ₹ 60,000 increase. Livestock: ₹ 2,40,000 – ₹ 2,00,000 = ₹ 40,000 increase.
• Creditors increase ₹ 20,000 (loss); R.D.D. of ₹ 20,000 created (loss).
• Reserve fund share of Sushil = ₹ 50,000 × 2/10 = ₹ 10,000.

(a) Revaluation Account

(b) Sushil’s Capital Account

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