CMA Intermediate · Financial Accounting · Retirement of Partner
Ravi, Sunil and Tarun share profits 5:3:2. Ravi retires on 31 July 2026 (books closed on 31 March). The deed provides for profit up to retirement to be computed on the basis of sales. Sales for the year ended 31 March 2026 were Rs 24,00,000 and the profit was Rs 3,00,000. Sales from 1 April to 31 July 2026 were Rs 10,00,000. What is Ravi's share of profit up to the date of retirement?
Ravi's share is Rs 62,500. Profit to retirement on the sales basis is Rs 3,00,000 x 10,00,000/24,00,000 = Rs 1,25,000, and Ravi's 5/10 share of this is Rs 62,500, credited to his capital account.
- ARs 62,500Correct
- BRs 1,25,000
- CRs 31,250
- DRs 75,000
Explanation
Profit on sales basis = 3,00,000 x 10,00,000/24,00,000 = 1,25,000. Ravi's share is 5/10, so 62,500. Rs 1,25,000 is the total profit, not his share. Rs 75,000 results from using 4/12 of profit with a 3/... mismatch of time basis and share.
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