Treatment of Proprietors Capital Balance
This query is : Resolved
14 March 2020
Mr. A runs proprietorship business of cloths and due to death of Mr. A his legal heirs decides to run the proprietorship business in partnership in equal profit sharing ratio.
Last Balance Sheet of Proprietorship Firm is as follows:
CAPITAL AND LIABILITES ASSETS
Proprietors Capital 11,55,244 Fixed Assets 2,55,900
Other Liabilities 4,55,620 Stock 10,39,770
Cash and Bank 3,15,194
TOTAL 16,10,864 TOTAL 16,10,864
Doubt: Whether proprietor’s Capital account can be distributed among the legal heirs in equal proportion and taken as partner’s capital as follows:
CAPITAL AND LIABILITES ASSETS
Legal Heir 1 Capital 2,88,811 Fixed Assets 2,55,900
Legal Heir 2 Capital 2,88,811
Legal Heir 3 Capital 2,88,811 Stock 10,39,770
Legal Heir 4 Capital 2,88,811
Other Liabilities 4,55,620 Cash and Bank 3,15,196
TOTAL 16,10,864 TOTAL 16,10,864
Last Balance Sheet of Proprietorship Firm is as follows:
CAPITAL AND LIABILITES ASSETS
Proprietors Capital 11,55,244 Fixed Assets 2,55,900
Other Liabilities 4,55,620 Stock 10,39,770
Cash and Bank 3,15,194
TOTAL 16,10,864 TOTAL 16,10,864
Doubt: Whether proprietor’s Capital account can be distributed among the legal heirs in equal proportion and taken as partner’s capital as follows:
CAPITAL AND LIABILITES ASSETS
Legal Heir 1 Capital 2,88,811 Fixed Assets 2,55,900
Legal Heir 2 Capital 2,88,811
Legal Heir 3 Capital 2,88,811 Stock 10,39,770
Legal Heir 4 Capital 2,88,811
Other Liabilities 4,55,620 Cash and Bank 3,15,196
TOTAL 16,10,864 TOTAL 16,10,864
14 March 2020
Yes proprietor’s Capital account can be distributed among the legal heirs in equal proportion and taken as partner’s capital.
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