Anil, Bhanu and Chandu were partners in a firm sharing profits in the ratio of 5:3:2. On March 31, 2017, their Balance Sheet was as under:

Anil died on October 1, 2017. It was agreed between his executors and the remaining partners that :
(a)Goodwill to be valued at 1 2 2 year’s purchase of the average profits of the previous four years which were :
Year 2013-14 – Rs.13,000, Year 2014-15 – Rs. 12,000,
Year 2015-16 – Rs.20,000, Year 2016-17 – Rs.15,000
(b) Patents be valued at Rs.8,000, Machinery at Rs.28,000, and Building at Rs.25,000.
(c) Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year.
(d) Interest on capital be provided at 10% p.a.
(e) Half of the amount due to Anil be paid immediately.
Prepare Anil’s Capital Account and Anil’s Executor’s Account as on October 1, 2017.

Explanation

2. Goodwill = `2½` years’ purchase `×` Average Profit
Average Profit `(Rs. 13,000+Rs.12,000+Rs.20,000+Rs.15,000)/(4)`
`=(5)/(2)xxRs. 15,000`
`=Rs. 37,500`
Anil's Share of Goodwill `=(5)/(10)xxRs. 37,500`
Rs. 18,750
3. Profit from the date of last balance sheet to date of death
(April 1, 2017 to October 1, 2017) = 6 months
Profit for 6 months = Rs. `=Rs. 15,000 xx(6)/(12)=Rs. 7,500`
Anil's share of profit = Rs. 7,500 `xx(5)/(10)` = Rs. 3,750
4. Interest on Capital
(April 1, 2017 to October 1, 2017)
= Rs. 30,000 `xx (10)/(100) xx (6)/(12)`
= Rs. 1,500