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
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