Question

Amit, Karan and Rakhi were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Amit died on 30^th June 2024 while the firm closed its books on 31^st March. According to their partnership deed, Amit’s representative would be entitled to get a share in the interim profits of the firm calculated on the basis of turnover. Turnover and profit for the year 2023-24 were ₹ 3,00,000 and ₹ 90,000 respectively and turnover in the year 2024-25 till the date of his death amounted to ₹ 60,000.

You are required to:

1. Calculate Amit’s share of interim profit. (1)
2. Pass the necessary Journal entry showing Amit’s share of interim profit. (2)

Answer 1

i.

Profit percentage on turnover of 2023-24:

Profit Rate = `("Previous Year’s Profit"/"Previous Year’s Turnover") xx 100`

= `((90,000)/(3,00,000)) xx 100`

= 30%

Profit till the death of Amit = Turnover till death × Profit Rate

= 60,000 × 30%

= 18,000

Amit’s profit-sharing ratio is `2/5` (from the 2 : 2 : 1 ratio).

Amit’s share of profit = Profit till the death of Amit × Amit’s Share

= 18,000 × `2/5`

= 7,200

ii.

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
30.6.2024	Profit and Loss Suspense A/c   ...Dr.		7,200	-
	To Amit’s Capital A/c		-	7,200
	(Being Amit’s share of profit transferred)