Question

Shoaib, Qamar and Azhar are partners of a firm (Platinum Trading LLC) that deals in used cars, car parts, services, renting cars for private and public sectors and maintenance service including on call services. Their business is running successfully, and they are planning to expand the business in similar verticals to gain larger market share. Everything was going well but after the sudden demise of Shoaib things are difficult to manage for them. Shoaib wife has been appointed as his legal representatives to receive his share. Sharing profit and losses in the ratio of 3:2:1. Qamar and Azhar collect the below details of Assets, liabilities and Capital balances but some information is missed. Name of Accounts OMR Name of Accounts OMR Cash at Bank 41,963 Shoaib Capital 142,311 Sundry Debtors 31,016 Qamar Capital 114,031 Stock 32,841 Azhar Capital 72,068 Lease Hold Premises 45,612 General Reserve A/c ? Machinery 136,837 Sundry Creditors 27,367 Building 91,225 Mr. Shoaib died on 31st March 2020. The legal representative of the deceased partner entitled to receive his share after the following adjustments. a. Goodwill be valued at 3 year’s purchase of the average profit of the last four years, Which were 2016 OMR 40,500; 2017 OMR 50,000; 2018 OMR 54,000; 2019 OMR 60,500. b. Building to be appreciated by 25%. c. Provision for doubtful debts to be made at 4% on Sundry Debtors. d. The assets are to be valued as, Machinery be valued at OMR 120,000 and Stock at OMR 20,000. e. For the purpose of calculating Shoaib’s share in the profit of 2020, the profit in 2020 should be taken to have been earned on the same as in 2019. f. A sum of OMR15,000 is to be paid immediately to the executors of Shoaib and the balance transferred to his loan account. You are required to pass necessary Journal entries with narrations to record the above transactions, prepare the Revaluation Account and Shoaib executors account.

Answer 1