22. Ramesh, Prakash and Suresh were partners in a firm sharing profits & losses in the ratio of 5:32.
On 31″ March 2020,

22. Ramesh, Prakash and Suresh were partners in a firm sharing profits & losses in the ratio of 5:32.
On 31″ March 2020, their balance sheet was as under:
Balance Sheet as on 31.3.2020
Liabilities
₹
Assets
3 ₹
Creditors.
14.000
8.000
Reserve Fund
6.000 Cash
11,000
Capitals:
70,000 Debtors
11,000
Ramesh 30,000
Patents
10,000
Prakash 25,000
Stock
50,000
Suresh 15,000
Machinery
90,000
90,000
Ramesh died on 30 Sept 2019. It was agreed between his executors and
the surviving partners that:
a) Good will to be valued at two and half years purchase of the average profits of the previous
years, which were:
2016-17 * 12,000, 2017-18 20,000, 2018-19 13, 000, 2019-20 15,000 (as per AS26
b) Share in the profit from the date of last balance sheet till to the date of death to be calculate
the basis of last year’s profit.
c) Interest on capital to be allowed at 12% p.a.​