Question

Aman, Raman and Suman were partners sharing profits in the ratio of 3 : 2 : 1 respectively. The profit and sales for the year ended 31 March, 2021 were ₹ 3 lakh and ₹ 10 lakh respectively.

Aman died on 30th November, 2021. Calculate the share of deceased partner in the profits for the period from 1st April, 2021 to 30th November, 2021, if the same is calculated:

1. On the basis of sales which were ₹ 8 lakh from 1st April, 2021 to 30th November, 2021.
2. On the basis of Time.

Also pass the necessary journal entry for the share.

Answer 1

(i) If profit is calculated on the basis of sales:

Journal Entry
Particulars	Dr. (₹)	Cr. (₹)
Profit & Loss Suspense A/c   ...Dr.	1,20,000
To Aman’s Capital A/c		1,20,000

(ii) If profit is calculated on the basis of time:

Journal Entry
Particulars	Dr. (₹)	Cr. (₹)
Profit & Loss Suspense A/c   ...Dr.	1,00,000
To Aman’s Capital A/c		1,00,000

Working note:

Aman’s profit-sharing ratio = 3 : 2 : 1, so his share is:

`3/(3 + 2 + 1) = 3/6 = 1/2`

1. On the basis of Sales

Profit for year ended 31 March 2021 = ₹ 3,00,000
Sales for year ended 31 March 2021 = ₹ 10,00,000

Profit ratio on sales:

`(3,00,000)/(10,00,000) = 30%`

Sales from 1 April 2021 to 30 November 2021 = ₹ 8,00,000

Estimated profit:

₹ 8,00,000 × 30% = ₹ 2,40,000

Aman’s share:

`2,40,000 xx 1/2 = 1,20,000`

2. On the basis of Time

Previous year’s profit = ₹ 3,00,000

Period from 1 April to 30 November = 8 months

Estimated profit for 8 months:

`3,00,000 xx 8/12 = 2,00,000`

Aman’s share:

`2,00,000 xx 1/2 = 1,00,000`