Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

Lisa, Monika and Nisha are partners in a firm sharing profits and los…

Lisa, Monika and Nisha are partners in a firm sharing profits and losses in the ratio of 2:2:1. Their capital A/c stood at ₹50,000, ₹50,000, and ₹25,000 respectively. Monika died and the balance in the reserve on that date was ₹15,000. If the goodwill of the firm is ₹30,000 and the profit on revaluation is ₹7,050.

What amount will be transferred to Monika's executor account?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → ₹70,820

On death, the amount due to the partner is credited to his executor’s account. It is his capital plus his share of reserve, goodwill and revaluation profit, each in his profit share (Monika 2/5).

Capital = ₹50,000
Share of reserve = ₹15,000 × 2/5 = ₹6,000
Share of goodwill = ₹30,000 × 2/5 = ₹12,000
Share of revaluation profit = ₹7,050 × 2/5 = ₹2,820
Amount to Monika’s Executors Account = ₹50,000 + ₹6,000 + ₹12,000 + ₹2,820 = ₹70,820

NCERT (2026-27 edition):
Ascertaining the Amount Due to Retiring/Deceased Partner – “The sum due to the retiring partner (in case of retirement) and to the legal representatives/ executors (in case of death) includes: (i) credit balance of his capital account; (ii) credit balance of his current account (if any); (iii) his share of goodwill; (iv) his share of accumulated profits (reserves); (v) his share in the gain of revaluation of assets and liabilities; (vi) his share of profits up to the date of retirement/death; (vii) interest on his capital, if involved, up to the date of retirement/death; and (viii) salary/commission, if any, due to him up to the date of retirement/death.”

What amount will be transferred to Monika's executor account?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → ₹70,820