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 the profit-sharing ratio of remaining partners does not change; P’s share of profit will be ----
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 5,500 credited P’s capital account Rs 27,500
Option 4: None of the above
Correct Answer: Profit and loss suspense account debited by Rs 27,500
Solution :
Answer =
Profit and loss suspense account debited by Rs 27,500
Total profits=80,000+ 90,000+1,00,000= 2,70,000.
Average profit= $\frac{2,70,000}{3}$= 90,000.
P's share= 90,000×$\frac{1}{3}$×$\frac{11}{12}$= Rs 27,500
Profit & loss suspense A/c Dr 27,500
To P's capital A/c 27,500
Hence, the correct option is 1.
