Question : A, B and C 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 31-12-2015 C died. On that date, his Capital account showed a credit balance of Rs.3,80,000 and Goodwill of the firm was valued at Rs. 1,20,000. There was a debit balance of Rs.50,000 in the Profit & Loss A/c.
C’s share of profit in the year of his death was to be calculated on the basis of the average profit of the last five years. The average profit for the last five years was Rs.75,000.
Q. Amount due to C transferred to his executors’ account will be -----------
Option 1: 4,00,000
Option 2: RS 4,05,250
Option 3: Rs 4,05,000
Option 4: None of the above
Correct Answer: None of the above
Solution : Answer = None of the above
C's Capital A/C
To Profit and Loss A/C | 10,000 | By Bal. B/D | 3,80,000 |
(50,000 × 1/5) | By Profit and Loss Susp. A/C | 11,250 | |
To C's Executor A/c | 4,05,250 | (75000 × 1/5 × 9/12) | |
By Goodwill | 24,000 | ||
(1,20,000 × 1/5) = 24000 | |||
4,15,250 | 4,15,250 |
Hence, the correct option is 4.