X, Y and Z were partners sharing profits and losses in the ratio 5 : 3 : 2. The firm closes its books on 31st March each year. On 24th August 2022, Y died. His share of profit was to be calculated on the basis of last year’s profit. The profit of the firm for the year ended 31-03-2022 was ₹2,40,000. Y’s share of profit for the year of his death will be:

Correct option is C

Y is entitled to his share of profit up to the date of death, based on the previous year’s profit, i.e., ₹2,40,000.
Step 1: Compute profit for the relevant period (1st April to 24th August 2022). Period = 1 April to 24 August = 146 days (30+31+30+31+24 = 146 days)
Profit for 146 days:
Profit = 2,40,000×146/365 = 2,40,000×0.4 = 96,000
Step 2: Y’s share (ratio 5 : 3 : 2) Y’s share = 3/10
Y' s profit=96,000×3/10=28,800
Thus, Y’s share of profit = ₹28,800, making option (c) the correct answer.
Information Booster
1. Profit till the date of death is calculated using time apportionment based on last year’s profit unless otherwise stated.
2. The legal representative of the deceased partner receives this profit as part of settlement.
3. The profit is transferred to the Deceased Partner’s Capital Account.
4. If the deed specifies a different method (e.g., interim accounts), that method prevails.
5. Such profit is treated as profit and not goodwill, hence fully credited to the deceased partner.