Nirmala, Divisha and Sara were partners in a firm sharing profits and losses in the 3:4:3. Books were closed on 31st...
Rohit Sharma February 27, 2023
Question : Nirmala, Divisha and Sara were partners in a firm sharing profits and losses in the 3:4:3. Books were closed on 31st March every year. Sara died on 1st February, 2022. As per the partnership deed Sara's executors are entitled to her share of profit till the date of death on the basis of Sales turnover. Sales for the year ended 31st March 2021 was ₹ 10,00,000 and profit for the same year was ₹ 1,20,000. Sales show a positive trend of 20% and percentage of profit earning is reduced by 2%. Journalise the transaction along with the working notes
The correct answer is –
Journal Entry
Date Particulars L.F. Dr. Amount Cr. Amount 3
1.02.22 Profit and Loss Suspense A/c Dr.
To Sara’s Capital A/c
(Being Sara’s share of profit allowed till
the date of her death)
30,000
30,000
Workings: Profit % to sales turnover for the year ended 31st
March,2021=1,20,000/10,00,000 X100= 12%
Estimated sales for the year ended 31st March,2022=₹ 10,00,000+20% of ₹ 10,00,000 = ₹12,00,000
Estimated sales till 01st February,2022 = ₹ 12,00,000 x 10/12 = ₹ 10,00,000
Profit percentage 12-2=10%
Profit amount till 01st February, 2022 = 10% of ₹ 10,00,000 = ₹ 1,00,000
Sara’s share of profit till 1st February,2022= 1,00,000 X 3 = ₹ 30,000
