A, B and C are partners in a firm whose books are closed on 31st March each year. B died on 30th June, 2009 and according to the agreement, the share of profit of a deceased partner up to the date of the death is to be calculated on the basis of the average profits for the last five years. The net profits for the last 5 years have been 2005 : Rs. 14,000; 2006 : Rs. 18,000; 2007 : Rs. 16,000; 2008 : Rs. 10,000 (loss) and 2009 : Rs. 16,000. Calculate B’s share of profits upto the date of death.

1800

No worries! We‘ve got your back. Try BYJU‘S free classes today!

2100

No worries! We‘ve got your back. Try BYJU‘S free classes today!

1200

No worries! We‘ve got your back. Try BYJU‘S free classes today!

900

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Open in App

Solution

The correct option is D
900

Calculation of B’s Share of Profit

Last 5 years’ total profit = 14,000 +18,000 +16,000 -10,000 +16,000 =Rs. 54,000

Average profit = 54,000 / 5 = Rs. 10,800

B’s share of profit = 10,800 x 1/3 x 3/12 = Rs. 900

Suggest Corrections

Similar questions

(a) X, Y and Z are partners in a firm sharing profits in the ratio 3 : 2 : 1. On 1st March, 2015, X retires from the firm. Y and Z agreed that the capital of the new firm shall be fixed at Rs 2,10,000 in the profit sharing ratio. The capital accounts of Y and Z after all adjustments on the date of retirement showed balance of Rs 1,45,000 and Rs 63,000 respectively, State the amount of actual cash to be brought in or to be paid to the partners.

(b) A, B and C are partners in a firm whose books are closed on 31st March each year. A died on 30th June, 2009 and according to the agreement, the share of profits of a deceased partner up to the date of the death is to be calculated on the basis of the average profit for the five years. The net profits for the last 5 years have been : 2005 - Rs 14,000; 2006 - Rs 18,000; 2007 - Rs 16,000; 2008 - Rs 10,000 (loss) and 2009 - Rs 16,000.

Calculate A's share of the profits up to the date of death and pass necessary Journal entry.

Aditi, Kavya and Sohail were partners in a firm sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on 31st March every year. On 30th September, 2017 Sohail died. According to the partnership deed, his legal representatives are entitled to the following :

(a) Capital as per Balance Sheet (Rs 60,000)

(b) Interest on capital @ 6 $%$ p.a., till the date of death.

(d) Share of goodwill to be determined on the basis of the three years purchase of the average profits of last four years. The profits of last four years were : Rs 30,000, Rs 50,000, Rs 40,000 and Rs 60,000

Arun, Tarun and Neha are partners sharing profits in the ratio of 3 : 2 : 1 Neha dies on 31st May 2006. Sales for the year 2005-2006 amounted to Rs.4,00,000.and the profit on sales is Rs.60,000. Accounts are closed on 31 March every year. Sales from lst April 2006 to 31st May 2006 is Rs.1,00,000. Calculate the deceased partner’s share in the profit upto the date of death.

PRACTICAL PROBLEMS

Vilas, Mangal, Guru were partners in a business sharing profits and losses in the ratio of 2:1:1 respectively. Their Balance sheet as on 31^st March, 2012 was as follows:

Balance Sheet as on 31^st March 2012
Dr.	Cr.
Liabilities		Amount Rs	Assets	Amount Rs
Capital			Land and Building	6,000
Vilas		6,000	Debtors	5,000
Mangal		7,000	Stock	3,000
Guru		3,400	Cash	6,000
Creditors		2,000
General Reserve		1,600
		20,000		20,000

Guru died on 1^st July, 2012

1) Land and Building was to be revalued to Rs 7,000 and RDD was to be created of Rs 200.

2) The drawings of Guru upto the date of his death amounted to Rs 1,000/-

3) Charge interest on drawings Rs 100/-

4) His share of goodwill should be calculated at ‘Three’ years purchase of the profits for the last four years which were Rs 15,000, Rs 13,000/-, Rs 7,000, Rs 5,000

5) The deceased partners share of profit upto the date of his death to be calculated on the basis of average profit of last two years.

Prepare:

1) Profit and Loss Adjustment A/c

2) Partners Capital A/cs

3) Balance Sheet of the continuing firm

4) Give working or share of profit and goodwill

Q. If three partners A, B & C are sharing profits as