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A partner’s average annual share of profit was ₹9,00,000. The partner dies four months after the beginning of the financial year. What amount of profit should be credited to the partner’s account up to the date of death?

Answer and explanation

Correct answer: ₹3,00,000

Profit share up to the date of death = Average annual profit share × elapsed months/12 = ₹9,00,000 × 4/12 = ₹3,00,000. ₹2,25,000 would represent only three months’ share, so it is incorrect. Exam tip: For the period up to death, multiply the annual profit share by the number of completed months divided by 12.

Related tags

Deceased PartnerProfit Till DeathProportionate ProfitPartnership AccountsRetirement And DeathDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A Partner

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