Question

Lisa, Monica and Nisha are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their capital A/c stood at Rs 50,000, Rs 30,000 and Rs 25,000 respectively. Monica died and balance in the reserve on that date was Rs15,000. If goodwill of the firm is Rs30,000 and profit on revaluation is Rs 7,050. What amount will be transferred to Monica's Executors Account ?

• A. Rs 50,820
• B. Rs 70,820
• C. Rs 8,820
• D. Rs 60,820

Hint:

Remember to apportion all relevant items like reserves, goodwill, and revaluation profits based on the deceased partner's profit sharing ratio.

Answer 1

The Correct Option is B

Calculating the Amount Due to Monica's Executor:
This involves determining Monica’s share of capital, reserves, goodwill, and revaluation profit, and summing them to find the total claim by her executor.
Step 1: Monica's Share of Reserves Total Reserves = Rs15,000
Monica's Share = (2/5) * Rs15,000 = Rs6,000
Step 2: Monica's Share of Goodwill Firm's Goodwill = Rs30,000
Monica's Share = (2/5) * Rs30,000 = Rs12,000
Step 3: Monica's Share of Revaluation Profit Total Revaluation Profit = Rs7,050
Monica's Share = (2/5) * Rs7,050 = Rs2,820
Step 4: Total Amount Due to Monica's Executor Total = Capital + Share of Reserves + Share of Goodwill + Share of Revaluation Profit
Total = Rs30,000 + Rs6,000 + Rs12,000 + Rs2,820 = Rs50,820 + Rs20,000 = Rs 70,820
Therefore, the amount transferred to Monica’s Executors Account is Rs 70,820.