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CMA Intermediate · Financial Accounting · Death of Partner

P, Q and R share profits equally. Q dies on 30 September 2026. The firm's profit for the year ended 31 March 2026 was Rs 2,40,000, and the deed provides that Q's share of profit up to the date of death is based on the last year's profit. What amount is credited to Q's capital account as profit up to the date of death?

Q is credited with Rs 40,000. Profit for the six months to the date of death is last year's Rs 2,40,000 times 6/12, which is Rs 1,20,000, and Q's equal one-third share of that is Rs 40,000. Ignoring time apportionment would wrongly give Rs 80,000.

  1. ARs 40,000Correct
  2. BRs 80,000
  3. CRs 1,20,000
  4. DRs 26,667

Explanation

Period from 1 April to 30 September 2026 is 6 months. Profit for the period = 2,40,000 x 6/12 = 1,20,000. Q's one-third share = Rs 40,000. Rs 80,000 ignores the time proportion, which is the key mistake.

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