|Workmen Compensation Reserve||30,000||Patents||30,000|
|Capital A/c :||Machinery||1,50,000|
|S – 1,25,000||Debtors||40,000|
|T – 75,000||3,50,000||Cash at Bank||40,000|
T died on 1st August, 2018. It was agreed that:
(a) Goodwill be valued at 212 years’ purchase of average of last 4 years’ profits which were: 2014-15: Rs. 65,000; 2015-16: Rs. 60,000; 2016-17: Rs. 80,000 and 2017-18: Rs. 75,000.
(b) Machinery be valued at Rs. 1,40,000; Patents be valued at Rs. 40,000; Leasehold be valued at Rs. 1,25,000 on 1st August, 2018.
(c) For the purpose of calculating T’s share in the profits of 2018-19, the profits in 2018-19 should be taken to have accrued on the same scale as in 2017-18.
(d) A sum of Rs. 21,000 to be paid immediately to the Executors of T and the balance to be paid in four equal half-yearly instalments together with interest @ 10% p.a.
Pass necessary Journal entries to record the above transactions and T’s Executors’ Account.