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A, B and C are partners in a firm whose books are closed on March 31st each year. A died on 30-06-2017 and according to the agreement, the share of profits of a deceased partner upto date of death is to be calculated on the basis of average profits for the last five years. The net profits loss for the last 5 years have been : Rs 14,000, Rs 18,000, Rs 22,000, Rs (10,000) Loss, Rs 16,000 respectively. Calculate A’s share of the profit upto the date of death and pass necessary journal entry. |
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Answer» Calculation of Average Profit: 4,000 + 18,000 + 22,000 – 10,000 + 16,000 \(= \frac { 60,000 }{ 5 } = 12,000\) Profit of 3 months = 12,000 x\(\frac{3}{12}\) = 3,000 |
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