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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


Team Careers360 5th Jan, 2024
Answer (1)
Team Careers360 14th Jan, 2024

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.

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