Multiple Choice Questions on P Q and R were partners sharing profits in the ratio of their Capital lsquo contribution which were ........... for Commerce 12th Preparation

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Multiple Choice Questions

P Q and R were partners sharing profits in the ratio of their Capital lsquo contribution which were ...........

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    P, Q and R were partners sharing profits in the ratio of their Capital ‘ contribution which were Rs6,00,000; Rs4,00,000 and Rs5,00,000 respectively. Their books are closed on 31st March every year. P dies on 24th August, 2018. Under the partnership deed, deceased partner is entitled to his share of profit/loss to the date of death based on the average profits of preceding three years. Profits were 2015 Rs50,000; 2016 Rs1,20,000 (Loss); 2017 Rs30,000 and 2018 Rs60,000. P’s share of profit/loss will be :

     Rs 2,222 Profit

    Incorrect Answer

    Rs 5,333 Profit

    Incorrect Answer

    Rs 5,333 Loss

    Incorrect Answer

     Rs 2,222Loss

    Correct Answer
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    Explanation:

    - To find P's share of profit or loss, we calculate the average profit/loss of the three years before death.

    - Consider the profits/losses for: 2015: Rs 50,000, 2016: Rs 1,20,000 loss, and 2017: Rs 30,000 profit.

    - Average profit/loss = (Rs 50,000 - Rs 1,20,000 + Rs 30,000) / 3 = Rs (-40,000) / 3 = Rs -13,333.33 (loss).

    - P's share in the capital: Rs 6,00,000 / Rs 15,00,000 = 2/5.

    - P's share of average loss = (2/5) * Rs 13,333.33 = Rs -5,333.33.

    - For the 5 months till P's death: (5/12) * Rs -5,333.33 = Rs -2,222.22.

    .

    By: santosh
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