Question : R, M and P were partners in a firm. P died on 29th February, 2020. His share of profit from the closure of the last accounting year till the date of death was to be calculated on the basis of the average of three completed years of profits before death. Profits for the years ended 31st March, 2017, 2018 and 2019 were Rs. 80,000, Rs. 90,000 and Rs. 1,00,000 respectively.
Question:-
If profit-sharing ratio of remaining partners changes and new ratio being 3: 2. Then
Option 1: Profit and loss suspense account debited by Rs 27,500
Option 2: Profit and loss suspense account credited by Rs 27,500
Option 3: Debited R’s capital account with RS 22,000 and M’s capital account Rs 5500 credited P’s capital account Rs 27,500
Option 4: None of the above
Correct Answer: Debited R’s capital account with RS 22,000 and M’s capital account Rs 5500 credited P’s capital account Rs 27,500
Solution :
Answer =
Debited R’s capital account with RS 22,000 and M’s capital account Rs 5500 credited P’s capital account Rs 27,500
If the profit sharing ratio of remaining partners and the new ratio is 3:2, then the entry will be:
R's capital A/c Dr 22,000
M's capital A/c Dr 5,500
To P's capital A/c 27,500
[In gaining ratio= New Ratio - Old Ratio]
Hence, the correct option is 3.
