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CMA Intermediate · Financial Accounting · Retirement of Partner

Anil, Bharat and Chetan share profits 3:2:1. Anil retires on 30 September 2026. The firm closes books on 31 March each year, and no accounts were drawn up at retirement. The deed is silent on profits to the date of retirement. Anil's share of profit up to retirement is to be computed on the basis of last year's profit of Rs 3,60,000, which is assumed to accrue evenly. What amount is credited to Anil's capital account?

Anil's share is Rs 90,000. Profit for the six months to retirement is Rs 1,80,000 (half of the last year's Rs 3,60,000), and his 3/6 share of that is Rs 90,000. This is credited to his capital account through the Profit and Loss Suspense Account.

  1. ARs 90,000Correct
  2. BRs 1,80,000
  3. CRs 60,000
  4. DRs 1,08,000

Explanation

Profit for 6 months = 3,60,000 x 6/12 = 1,80,000. Anil's share is 3/6 = 1/2, so 1,80,000 x 1/2 = 90,000. Rs 1,80,000 is the whole six-month profit, ignoring his ratio. Rs 60,000 wrongly uses a 1/3 share.

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