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

Concept: When a partner dies, his share of profit up to the date of death is calculated according to the partnership agreement. Here, profit is to be determined on the basis of: \[ \text{Average profit of the last five years} \]

Step 1: Calculate total profits for five years.
\[ 2013 = Rs.14,000 \] \[ 2014 = Rs.18,000 \] \[ 2015 = Rs.16,000 \] \[ 2016 = -Rs.10,000 \] \[ 2017 = Rs.16,000 \] Total: \[ 14,000 + 18,000 + 16,000 - 10,000 + 16,000 \] \[ = Rs.54,000 \]

Step 2: Calculate average profit.
\[ \text{Average Profit} = \frac{54,000}{5} \] \[ = Rs.10,800 \]

Step 3: Calculate profit up to date of death.
A died on: \[ 30^{th} \text{ June, 2017} \] That means profit is required for: \[ 3 \text{ months} \] Thus: \[ 10,800 \times \frac{3}{12} \] \[ = Rs.2,700 \]

Step 4: Compare with given options.
The calculated amount: \[ Rs.2,700 \] is not among the given options. Therefore: \[ \boxed{\text{None of the above}} \]

Step 5: Identify the correct option.
Hence, the correct answer is: \[ \boxed{(D)} \]