A, B and C share profits in the ratio of 3:2:1. C dies four months after the beginning of the year. The previous year's profit was Rs. 180,000, and profit is assumed to accrue evenly. What amount is credited to C's account for the period before death?
Correct answer: B. Rs. 10,000
- A. Rs. 5,000
- B. Rs. 10,000
- C. Rs. 15,000
- D. Rs. 30,000
Explanation
C's annual share is one-sixth of Rs. 180,000, or Rs. 30,000. For four months, the credited amount is one-third of that annual share, equal to Rs. 10,000.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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