Question

Ramu, Shamu & Raju were partners sharing profits and losses in the ratio of $3:2:2$. On $1$st October, $2019$, Ramu died. Profit earned by the firm for the period $\mathrm{1.1.2019}$ to $\mathrm{31.12.2019}$ was $Rs.46,000$ out of which profit up $1$st October, $2019$ was $Rs.35,700$.
Capital accounts balance of partners on 1st October, 2019 was as follows:
Ramu = $Rs.87,414$
Shamu = $Rs.55,276$
Raju = $Rs.55,276$
How much claim can be made by Ramu's Executors as per Section 37 of Partnership Act, 1932 for the period $\mathrm{1.10.2019}$ to $\mathrm{31.12.2019}$?

• A. $Rs.4,813$
• B. $Rs.1,311$
• C. $Rs.20,576$
• D. $Rs.15,764$

Answer 1

The correct option is A $Rs.4,813$

As per Section 37 of Partnership Act, 1932, in case of settlement of deceased partner's account on the date other then the date of death, the executor of deceased partner has a choice to take Either -
(A) Profit earned on unsettled capital = Profit * ( Unsettled capital as on 1.10.2019 / Total capitalisation on 1.10.2019 )

= 10900 * (87414) / (87414 + 55276 + 55276)

= 10900 * (87414 / 197966)

= 4813

(B) Interest on capital @ 6% i.e. 87414 * 6% * (3/12) = 1311

Option A is beneficial, therefore heirs of Ramu will opt for proportionate of share of profit i.e. 4813.