Question

A B and C for partner in a firm. B died on 31st august 2018. 20 share of profit from the closure of the last accounting year till date of death was to be calculated on the basis of the average of three completed year of profit before death. Profit for the year ended 31st march 2016,2017 and 2018 were rupees 40000, 50000 and 72000 respectively. The firm closed its book on 31st march every year.
Calculate B share of profit till the date of her death and pass necessary journal entry for the same assuming.
1. There is no charge in profit sharing ratio of A and C.
2. There is charge in profit sharing ratio of A and C and new ratio is 7:5​

Answer 1

Answer:

Explanation:

The retiring or deceased partner is entitled to his share of goodwill at the time of retirement or death because the goodwill earned by the firm is the result of the efforts of all the partners in the past. ... Therefore all continuing partners pay to retiring partner the share of Goodwill in gaining ratio.

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