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CMA Intermediate · Financial Accounting · Death of Partner

X, Y and Z share profits 3:2:1. Z dies on 31 December 2026. Z's capital is Rs 2,00,000, his share of goodwill is to be credited, and the firm's goodwill is valued at Rs 3,60,000 and is not to appear in the books. Z's drawings to date are Rs 20,000. Z's share of profit to date of death is Rs 15,000. Interest on capital due to Z is Rs 6,000. What amount is due to Z's executors?

The executors are due Rs 2,61,000: capital Rs 2,00,000 plus goodwill share Rs 60,000 (one-sixth of Rs 3,60,000), profit Rs 15,000 and interest Rs 6,000, less drawings Rs 20,000. Omitting the drawings deduction would overstate the amount at Rs 2,81,000.

  1. ARs 2,41,000Correct
  2. BRs 2,81,000
  3. CRs 2,21,000
  4. DRs 2,61,000

Explanation

Z's goodwill share = 3,60,000 x 1/6 = 60,000. Total = 2,00,000 + 60,000 + 15,000 + 6,000 - 20,000 = Rs 2,61,000. Checking: 2,00,000+60,000=2,60,000; +21,000=2,81,000; -20,000=2,61,000. So the correct amount is Rs 2,61,000, which is option 4.

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