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Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for?
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Illustration 3 A, B and C were partners. Their partnership deed provid...
Partnership Deed
The partnership deed of A, B and C provided for sharing of profits in the ratio of A 26%, B 34% and C 40%. It also included a provision for what would happen in case of death of a partner.
Death of a Partner
In case of death of a partner, his capital would remain in the business for a stated period at a fixed rate of interest. However, the deceased partner's share would be credited with an amount for his share of profits till the date of his death.
Calculation of Deceased Partner's Share
The calculation of the deceased partner's share would be done as follows:
- Determine the share of profits of the deceased partner as per the profit sharing ratio in the partnership deed.
- Calculate the profits earned by the firm till the date of the deceased partner's death.
- Determine the period for which the deceased partner's share would be credited with profits. This would be the period from the date of the last distribution of profits till the date of the deceased partner's death.
- Calculate the amount of profits earned by the firm during this period.
- Multiply the share of profits of the deceased partner with the profits earned by the firm during this period.
- This amount would be credited to the deceased partner's share.
Example
Suppose C dies on 1st January and the last distribution of profits was made on 31st December. The partnership deed provides for his share of profits to be 40%. The profits earned by the firm during the period from 1st January to 31st December is Rs. 10,00,000. The period for which C's share would be credited with profits is one year. Therefore, the calculation of C's share would be as follows:
- C's share of profits = 40% of Rs. 10,00,000 = Rs. 4,00,000
- Profits earned during the period = Rs. 10,00,000
- C's share of profits for the period = 40% of Rs. 10,00,000 = Rs. 4,00,000
- Total amount to be credited to C's share = Rs. 4,00,000
In this way, the deceased partner's share would be credited with an amount for his share of profits till the date of his death.
The partnership deed of A, B and C provided for sharing of profits in the ratio of A 26%, B 34% and C 40%. It also included a provision for what would happen in case of death of a partner.
Death of a Partner
In case of death of a partner, his capital would remain in the business for a stated period at a fixed rate of interest. However, the deceased partner's share would be credited with an amount for his share of profits till the date of his death.
Calculation of Deceased Partner's Share
The calculation of the deceased partner's share would be done as follows:
- Determine the share of profits of the deceased partner as per the profit sharing ratio in the partnership deed.
- Calculate the profits earned by the firm till the date of the deceased partner's death.
- Determine the period for which the deceased partner's share would be credited with profits. This would be the period from the date of the last distribution of profits till the date of the deceased partner's death.
- Calculate the amount of profits earned by the firm during this period.
- Multiply the share of profits of the deceased partner with the profits earned by the firm during this period.
- This amount would be credited to the deceased partner's share.
Example
Suppose C dies on 1st January and the last distribution of profits was made on 31st December. The partnership deed provides for his share of profits to be 40%. The profits earned by the firm during the period from 1st January to 31st December is Rs. 10,00,000. The period for which C's share would be credited with profits is one year. Therefore, the calculation of C's share would be as follows:
- C's share of profits = 40% of Rs. 10,00,000 = Rs. 4,00,000
- Profits earned during the period = Rs. 10,00,000
- C's share of profits for the period = 40% of Rs. 10,00,000 = Rs. 4,00,000
- Total amount to be credited to C's share = Rs. 4,00,000
In this way, the deceased partner's share would be credited with an amount for his share of profits till the date of his death.
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Illustration 3 A, B and C were partners. Their partnership deed provid...
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Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for?
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Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for?.
Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for?.
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Here you can find the meaning of Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? defined & explained in the simplest way possible. Besides giving the explanation of
Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for?, a detailed solution for Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? has been provided alongside types of Illustration 3 A, B and C were partners. Their partnership deed provided that they were to share profits tha A 26 per cent; B 34 per cent; C 40 per cent; and that if a partner died, his capital should remain in the business a stated period at a fixed rate of interest, but that the deceased partner's share should be credited with an amount for? theory, EduRev gives you an
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