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## Partnership and LLP Accounts ### Illustration 5 Diya, Riya, and Kiya are partners of M/s DRK Fabrics sharing profits and losses in the ratio of 2:1:2. On 31st March 2022, their balance sheet was as under: | Liabilities | ₹ | Assets | ₹ | |---|---|---|---| | **Capitals:** | | **Land & Buildi...

## Partnership and LLP Accounts ### Illustration 5 Diya, Riya, and Kiya are partners of M/s DRK Fabrics sharing profits and losses in the ratio of 2:1:2. On 31st March 2022, their balance sheet was as under: | Liabilities | ₹ | Assets | ₹ | |---|---|---|---| | **Capitals:** | | **Land & Building** | 1,65,000 | | Diya | 1,50,000 | **Furniture** | 75,000 | | Riya | 1,80,000 | **Joint life Policy** | 60,000 | | Kiya | 70,000 | **Inventory** | 88,740 | | **General Reserve** | 1,40,000 | **Trade Receivable** | 96,750 | | **Trade payables** | 60,000 | **Bank** | 1,14,510 | | | 6,00,000 | | 6,00,000 | Kiya died on 30th September 2022. The partnership deed provides as follows: * **That partners be allowed interest at 12% p.a. on their capitals, but no interest be charged on drawings.** * **Upon the death of a partner, the goodwill of the firm be valued at one years' purchase of the average net profits** (after charging interest on capital) for the four years to 31st March preceding the death of a partner. The profits of the firm before charging interest on capitals were: | Year | Profits | |---|---| | 2018-19 | 1,62,000 | | 2019-20 | 1,99,000 | | 2020-21 | 1,87,000 | | 2021-22 | 1,96,000 | * **Average capital during preceding four years may be assumed as ₹ 3,00,000** * **Profits till the date of death to be ascertained on the basis of average profit of previous four years** * **Upon the death of a partner, ** she is to be credited with her share of the profits, interest on capitals etc. calculated till the date of death **After the death of Kiya:** * **₹ 2,00,000 was received from insurance company against Joint life Policy** * **Land & Building was appreciated by 20%, Furniture to be depreciated** by 10%, inventory to be revalued at 80,000. Bad debts amounted ₹ 1760.