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Question : A, B and C were partners sharing profits in the proportion of one-half, one-fourth and one-fourth respectively. As of March 31, 2018, A’s capital is Rs 1,00,000 and A’s loan account ( debit Balance ) is Rs 30,000. A died on 1st April 2018. According to the partnership agreement, the goodwill was to be calculated at two two-year purchases of average profits of three completed years preceding the death or retirement of a partner. The deceased partner’s share of capital and goodwill, etc., was paid out in cash on 4th April 2018, the available cash balance being supplemented by a loan from the film’s banker on the security of the freehold property. The net profits of the years ending 31st March 2016, 2017 and 2018 were Rs.55,000, Rs.48,000 and Rs.65,000 respectively.
Q. Amount due to A transferred to his Executor’s A/c will be --------

Option 1: Rs 1,00,000

Option 2: Rs 1,26,000

Option 3: Rs 2,00,000

Option 4: None of the above


Team Careers360 16th Jan, 2024
Answer (1)
Team Careers360 21st Jan, 2024

Correct Answer: None of the above


Solution : Answer = None of the above

Total Profit of Lost of 3 years
= 55000 + 48000+65000
= 1,68,000
Average Profit = 1,68000/3 = 50000
Goodwill = 56000 × 2 = 1,12000
A's Share = 1,12000 × 2/4 = 56000
B's Capital A/c Dr. 28000
C's Capital A/c Dr. 28000
To A'c Capital A/c 56000
(G.Ratio = 1:1)

A's Capital A/c

To A's Loan 30,000 By Bal. b/d 1,00,000
To A's Executor’s A/c 1,58,500 By B's Capital A/c 28,500
By C's Capital A/c 28,000
By Profit and Loss App. A/c 32,500
1,88,500 (65000 × 2/4) 1,88,500

Hence, the correct option is 4.

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