Step 1: Revaluation of assets
The assets are to be revalued as per the agreement: - Stock: โน16,700 - Furniture: โน16,200 - Land and Building: โน30,100
Step 2: Calculate the profit share of Narendra up to his death
Narendra's share of profit up to the date of his death will be based on the profit of the last year, which was โน40,000. His share in profits is , since the profit-sharing ratio is 5:3:2. Profit share = .
Step 3: Calculate the goodwill
The average profit of the last four years is: Narendra's share in goodwill is valued at 3 times the average profit. Therefore, his share in goodwill is: Since his share in the profit ratio is 2 parts, his share in goodwill is:
Step 4: Calculate the salary and drawings adjustment
Narendra was entitled to a monthly salary of โน1,200. He passed away on 30th June 2019, so the total salary due is for 3 months: His monthly drawing was โน900, so the total drawing up to the date of his death is:
Step 5: Calculate the interest on capital
Interest on capital is to be allowed at 10% per annum. Narendra's capital balance on 31st March 2019 was โน12,000, so the interest due is:
Step 6: Prepare the Capital Account of Narendra
Now, let us prepare Narendra's Capital Account, showing the amount payable to his executor:
Final Answer: The amount payable to Narendra's executor is โน38,100.