Question

A, B and C are partners in a firm whose books are closed on March 31st each year. A died on 30th June, 2017 and according to the agreement, the share of profits of a deceased partner up to the date of death is to be calculated on the basis of the average profits for the last five years. The net profits for the last 5 years have been: \[ 2013 = Rs.14,000 \] \[ 2014 = Rs.18,000 \] \[ 2015 = Rs.16,000 \] \[ 2016 = Rs.10,000 \text{ (Loss)} \] \[ 2017 = Rs.16,000 \] Calculate A's share of profits up to the date of death.

• A. Rs.1,200
• B. Rs.900
• C. Rs.300
• D. None of the above

Hint:

For deceased partner's profit: \[ \text{Average Profit} \times \frac{\text{Period}}{12} \] Remember to treat losses as negative while calculating average profit.

Answer 1

The Correct Option is D